JP MORGAN SERIES TRUST
485APOS, 1999-02-01
Previous: BERGER BIAM WORLDWIDE FUNDS TRUST, 497J, 1999-02-01
Next: CONSOLIDATED CIGAR HOLDINGS INC, 3, 1999-02-01



                 As filed with the U.S. Securities and Exchange
                        Commission on February 1, 1999.

                    Registration Nos. 333-11125 and 811-07795


                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM N-1A

             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                         POST-EFFECTIVE AMENDMENT NO. 16

                                       AND

         REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

                                AMENDMENT NO. 17

                            J.P. MORGAN SERIES TRUST
                           (formerly JPM Series Trust)
               (Exact Name of Registrant as Specified in Charter)

            60 State Street, Suite 1300, Boston, Massachusetts 02109
                    (Address of Principal Executive Offices)

       Registrant's Telephone Number, including Area Code:  (617) 557-0700

                Margaret W. Chambers, c/o Funds Distributor, Inc.
            60 State Street, Suite 1300, Boston, Massachusetts 02109
                     (Name and Address of Agent for Service)

                     Copy to: John E. Baumgardner, Jr., Esq.
                               Sullivan & Cromwell
                                125 Broad Street
                            New York, New York 10004


      It is proposed that this filing will become effective (check appropriate
box):

[ ] Immediately upon filing pursuant to paragraph (b)
[ ] on   (date)   pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on   (date)   pursuant to paragraph (a)(i) 
[X] 75 days after filing pursuant to paragraph (a)(ii) 
[ ] on   (date)   pursuant to paragraph (a)(ii) of Rule 485.

If appropriate, check the following box:

[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.


<PAGE>

                                        ____________, 1999         PROSPECTUS



J.P. MORGAN INSTITUTIONAL
TAX AWARE ENHANCED INCOME FUND


                                             ---------------------------------
                                             Seeking high after tax total
                                             returns by investing primarily in
                                             taxable or tax exempt fixed income
                                             securities



This prospectus contains essential information for anyone investing in the fund.
Please read it carefully and keep it for reference.

As with all mutual funds, the fact that these shares are registered with the
Securities and Exchange Commission does not mean that the Commission approves
them as an investment or guarantees that the information in this prospectus is
correct or adequate. It is a criminal offense to state or suggest otherwise.

                                                               JP MORGAN

Distributed by Funds Distributor, Inc.

<PAGE>


CONTENTS
                                       J.P. MORGAN INSTITUTIONAL SHORT TERM
                                       TAX AWARE FUND
- ---------------------------------------------------------------------------

The fund's goal,              --       Fund Description...................
investment approach,                   Investor Expenses..................
risks and expenses


                                       FIXED INCOME MANAGEMENT APPROACH
- ---------------------------------------------------------------------------

                              --       J.P. Morgan........................
                                       Fixed income tax aware investing
                                         at J.P. Morgan...................
                                       Who may want to invest.............
                                       Fixed income investment process

                                       YOUR INVESTMENT
- ---------------------------------------------------------------------------

Investing in the J.P. Morgan  --       Investing through a financial 
Institutional Tax Aware                   professional....................
Enhanced Income Fund                   Investing directly.................
                                       Opening your account...............
                                       Adding to your account.............
                                       Selling shares.....................
                                       Account and transaction policies...
                                       Dividends and distributions........
                                       Tax considerations.................

                                       FUND DETAILS
- ---------------------------------------------------------------------------

More about risk and the       --       Business structure.................
fund's business operations             Management and administration......
                                       Risk and reward elements...........

                                       FOR MORE INFORMATION
- ---------------------------------------------------------------------------

Where to learn more about     --       Back cover
the fund and other
J.P.  Morgan funds

<PAGE>

J.P. MORGAN INSTITUTIONAL
TAX AWARE ENHANCED INCOME FUND
                                                       TICKER SYMBOL: ________
- ------------------------------------------------------------------------------

GOAL

          The fund's goal is to provide high after tax total returns, consistent
with low volatility of principal. This goal can be changed without shareholder
approval.

INVESTMENT APPROACH

          The fund invests primarily in high quality municipal securities that
it believes have the potential to provide high current income that is free from
federal income tax. The fund also may invest in taxable fixed income securities,
including U.S. government and agency securities, domestic and foreign corporate
bonds, asset-backed and mortgage-related securities, and money market
instruments, that it believes have the potential to provide a higher after tax
total return over time. These securities may be of any maturity, but under
normal market conditions the fund's duration (duration is a measure of how
sensitive the securities held by the fund may be to changes in interest rates)
will range between three and eighteen months. The fund's tax aware investment
strategies are described on page ___.

          Up to 25% of the fund's assets may be invested in foreign securities.
At least 90% of the fund's assets must be invested in securities that, at the
time of purchase, are rated investment grade (BBB/Baa or better) by a nationally
recognized statistical rating organization or are the unrated equivalent,
including at least 75% in securities rated A or better. No more than 10% of the
fund's assets may be invested in securities rated BB.

RISK/RETURN SUMMARY

          The value of your investment in the fund will fluctuate in response to
changes in interest rates. Fund performance also will depend on the
effectiveness of J.P. Morgan's research and the success of the investment
process, which is described on page ___.

          Although any rise in interest rates is likely to cause a fall in the
price of fixed income securities, the fund's comparatively short duration is
designed to help keep its share price within a relatively narrow range. Because
it seeks to minimize risk, the fund will generally offer less income and, during
periods of declining interest rates, may offer lower total returns than funds
with longer durations. The fund's tax aware strategies may reduce your taxable
income but will not eliminate it. Maximizing after tax returns may require
trade-offs that reduce pre-tax returns. To the extent that the fund seeks higher
returns by investing in non-investment grade bonds, often called junk bonds, it
takes on additional risks, since these bonds are more sensitive to economic news
and their issuers have a less secure financial position. To the extent the fund
invests in foreign securities, it could lose money because of foreign government
actions, political instability, currency fluctuations or lack of adequate and
accurate information.

          An investment in the fund is not a deposit of any bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. You could lose money if you sell when the fund's share price
is lower than when you invested.

          For a more detailed discussion of the fund's investments and their
main risks, as well as fund strategies, please see pages ____.

<PAGE>

[RIGHT SIDE BAR]

REGISTRANT: J.P. MORGAN SERIES TRUST
(J.P. MORGAN INSTITUTIONAL TAX AWARE ENHANCED INCOME FUND)

PORTFOLIO MANAGEMENT

The fund's assets are managed by J.P. Morgan, which currently manages over $275
billion, including more than $_______ billion using the same strategy as the
fund.

The portfolio management team is led by _______________, managing director, who
has been at J.P. Morgan since ______________.

[RIGHT SIDE BAR]

BEFORE YOU INVEST

Investors considering the fund should understand that:

- - The value of the fund's shares will fluctuate over time.
- - There is no assurance that the fund will meet its investment goal.
- - The fund does not represent a complete investment program.

INVESTOR EXPENSES

The expenses of the fund are       ANNUAL FUND OPERATING EXPENSES (%) 
shown at right. The fund has       ---------------------------------- 
no sales, redemption,            (expenses that are deducted from fund assets)
exchange, or account fees,
although some institutions may                            INSTITUTIONAL SHARES
charge you a fee for shares                               --------------------
you buy through them. The          Management fees             0.15 
annual fund expenses are           Marketing (12b-1) fees      none
deducted from fund assets          Other expenses              0.18
prior to performance
calculations. "Other expenses"     __________________________________________
listed in the fee table are        Total annual fund 
estimated fees to be paid by       operating expenses          0.33
the fund for the current           __________________________________________
fiscal year.


EXPENSE EXAMPLE

The example below is intended
to help you compare the cost
of investing in the fund with
the cost of investing in other
mutual funds. The example
assumes: $10,000 initial
investment, 5% return each
year, total operating expenses
unchanged, and all shares sold
at the end of each time
period. The example is for
comparison only; the fund's
actual return and your actual
costs may be higher or lower.

1 year            $_____
3 years           $_____


<PAGE>

FIXED INCOME MANAGEMENT APPROACH
- ------------------------------------------------------------------------

J.P. MORGAN

Known for its commitment to proprietary research and its disciplined investment
strategies, J.P. Morgan is the asset management choice for many of the world's
most respected corporations, financial institutions, governments and
individuals. Today, J.P. Morgan employs over 300 analysts and portfolio managers
around the world and has more than $275 billion in assets under management,
including assets managed by the fund's adviser, J.P. Morgan Investment
Management Inc.

FIXED INCOME TAX AWARE INVESTING AT J.P. MORGAN 

The fund is designed to provide a high level of after tax current income, price
stability and liquidity. In doing so, the fund sells securities when the
anticipated performance benefit justifies the resulting tax liability. This
strategy may include purchasing both municipal obligations that are exempt from
federal income tax, and taxable securities, depending on which opportunity J.P.
Morgan determines will generate the highest after tax return. It seeks to
capitalize on fundamental and technical opportunities in the different markets
to enhance return.


<PAGE>

[RIGHT SIDE BAR]

WHO MAY WANT TO INVEST

The fund is designated for investors who:

- -  want to add an income investment to further diversify a portfolio

- -  want an investment whose risk/return potential is higher than that of money
   market funds but generally less than that of longer duration bond funds

- -  want an investment that pays monthly dividends 1 want high after tax total
   returns

The fund is NOT designed for investors who:

- -  are investing for aggressive long-term growth

- -  are investing through a tax-deferred account such as an IRA

FIXED INCOME INVESTMENT PROCESS

In managing the fund, J.P. Morgan employs a three-step process that combines
sector allocation, fundamental research for identifying portfolio securities,
and duration management.

SECTOR ALLOCATION The sector allocation team meets regularly, analyzing the
fundamentals of a broad range of sectors in which the fund may invest. The team
seeks to enhance performance and manage risk by underweighting or overweighting
sectors.

SECURITY SELECTION Relying on the insights of different specialists, including
credit analysts, quantitative researchers, and dedicated fixed income traders,
the portfolio managers make buy and sell decisions according to the fund's goal
and strategy.

DURATION MANAGEMENT Forecasting teams use fundamental economic factors to
develop strategic forecasts of the direction of interest rates. Based on these
forecasts, strategists establish the fund's target duration (a measure of how
sensitive the securities held by the fund may be to changes in interest rates),
typically remaining relatively close to the duration of the market as a whole,
as represented by the fund's benchmark. The strategists closely monitor the fund
and make tactical adjustments as necessary.

YOUR INVESTMENT

For your convenience, the J.P. Morgan Funds offer several ways to start and add
to fund investments.

INVESTING THROUGH A FINANCIAL PROFESSIONAL

If you work with a financial professional, either at J.P. Morgan or elsewhere,
he or she is prepared to handle your planning and transaction needs. Your
financial professional will be able to assist you in establishing your fund
account, executing transactions and monitoring your investment. If your fund
investment is not held in the name of your financial professional and you prefer
to place a transaction order yourself, please use the instructions for investing
directly.

INVESTING DIRECTLY

Investors may establish accounts without the help of an intermediary by using
the instructions below and at right:

- -  Determine the amount you are investing. The minimum amount for initial
   investments in the fund is $5,000,000 and for additional investments $25,000,
   although these minimums may be less for some investors. For more information
   on minimum investments, call 1-800-521-5411.

- -  Complete the application. Please apply now for any account privileges you
   may want to use in the future, in order to avoid the delays associated with
   adding them later on.

- -  Mail in your application, making your initial investment as shown on the
   right.

For answers to any questions, please speak with a J.P. Morgan Funds Service
representative at 1-800-521-5411.

OPENING YOUR ACCOUNT

   BY WIRE

- -  Mail your completed application to the Shareholder Services Agent.

- -  Call the Shareholder Services Agent to  obtain an account number and to
   place a purchase order. FUNDS THAT ARE WIRED WITHOUT A PURCHASE ORDER WILL
   BE RETURNED UNINVESTED.

- -  After placing your purchase order, instruct your bank to wire the amount of
   your investment to:

   State Street Bank & Trust Company
   ROUTING NUMBER: 011-000-028
   CREDIT:  J.P. Morgan Funds
   ACCOUNT NUMBER:  9904-226-9
   FCC:  Your account number, name of registered owner(s) and fund name.

   BY CHECK

- -  Make out a check for the investment amount payable to J.P. Morgan Funds.

- -  Mail the check with your completed application to the Transfer Agent.

   BY EXCHANGE

- -  Call the Shareholder Services Agent to effect an exchange.

   ADDING TO YOUR ACCOUNT

   BY WIRE

- -  Call the Shareholder Services Agent to place a purchase order. Funds that
   are wired without a purchase order will be returned uninvested.

- -  Once you have placed your purchase order, instruct your bank to wire the
   amount of your investment as described above.

   BY CHECK

- -  Make out a check for the investment amount payable to J.P. Morgan Funds.

- -  Mail the check with a completed investment slip to the Transfer Agent. If
   you do not have an investment slip, attach a note indicating your account
   number and how much you wish to invest in which fund(s).

   BY EXCHANGE

- -  Call the Shareholder Services Agent to effect an exchange.

SELLING SHARES

   BY PHONE - WIRE PAYMENT

- -  Call the Shareholder Services Agent to verify that the wire redemption
   privilege is in place on your account. If it is not, a representative can
   help you add it.

- -  Place your wire request. If you are transferring money to a non-Morgan
   account, you will need to provide the representative with the personal
   identification number (PIN) that was provided to you when you opened your
   fund account.

   BY PHONE - CHECK PAYMENT

- -  Call the Shareholder Services Agent and place your request. Once your
   request has been verified, a check for the net cash amount, payable to the
   registered owner(s), will be mailed to the address of record. For checks
   payable to any other party or mailed to any other address, please make your
   request in writing (see below).

   IN WRITING

- -  Write a letter of instruction that includes the following information: the
   name of the registered owner(s) of the account; the account number; the fund
   name; the amount you want to sell and the recipient's name and address or
   wire information, if different from those of the account registration.

- -  Indicate whether you want any cash proceeds sent by check or by wire.

- -  Make sure the letter is signed by an authorized party. The Shareholder
   Services Agent may require additional information, such as a signature
   guarantee.

- -  Mail the letter to the Shareholder Services Agent.

   BY EXCHANGE

- -  Call the Shareholder Services Agent to effect an exchange.

<PAGE>

ACCOUNT AND TRANSACTION POLICIES

TELEPHONE ORDERS The fund accepts telephone orders from all shareholders. To
guard against fraud, the fund requires shareholders to use a PIN, and may record
telephone orders or take other reasonable precautions. However, if the fund does
take such steps to ensure the authenticity of an order, you may bear any loss if
the order later proves fraudulent.

EXCHANGES You may exchange shares in the fund for shares in any other J.P.
Morgan or J.P. Morgan Institutional mutual fund at no charge (subject to the
securities laws of your state). When making exchanges, it is important to
observe any applicable minimums. Keep in mind that for tax purposes an exchange
is considered a sale.

The fund may alter, limit or suspend its exchange policy at any time.

BUSINESS DAYS AND NAV CALCULATIONS The fund's regular business days and hours
are the same as those of the New York Stock Exchange (NYSE). The fund calculates
its net asset value per share (NAV) every business day as of the close of
trading on the NYSE (normally 4:00 p.m. eastern time). The fund's securities are
typically priced using market quotes or pricing services. When these methods are
not available or do not represent a security's value at the time of pricing, the
security is valued in accordance with the fund's fair valuation procedures.

TIMING OF ORDERS Orders to buy or sell shares are executed at the next NAV
calculated after the order has been accepted. Orders are accepted until the
close of trading on the NYSE every business day and are executed the same day,
at that day's NAV. The fund has the right to suspend redemption of shares and to
postpone payment of proceeds for up to seven days or as permitted by law.

TIMING OF SETTLEMENTS When you buy shares, you will become the owner of record
when the fund receives your payment, generally the day following execution. When
you sell shares, cash proceeds are generally available the day following
execution and will be forwarded according to your instructions.

When you sell shares that you recently purchased by check, your order will be
executed at the next NAV but the proceeds will not be available until your check
clears. This may take up to 15 days.


<PAGE>


STATEMENTS AND REPORTS The fund sends monthly account statements as well as
confirmations after each purchase or sale of shares (except reinvestments).
Every six months the fund sends out an annual or semi-annual report containing
information on its holdings and a discussion of recent and anticipated market
conditions and fund performance.

- ------------------------------------------------------------------------------

Shareholder Services Agent
J.P. MORGAN FUNDS SERVICES
522 Fifth Avenue
New York, NY  10036
1-800-521-5411

Representatives are available 8:00 a.m. to 5:00 p.m. 
eastern time on fund business days.

ACCOUNTS WITH BELOW-MINIMUM BALANCES If your account balance falls below the
minimum for 30 days as a result of selling shares (and not because of
performance), the fund reserves the right to request that you buy more shares or
close your account. If your account balance is still below the minimum 60 days
after notification, the fund reserves the right to close out your account and
send the proceeds to the address of record.

DIVIDENDS AND DISTRIBUTIONS

Income dividends are typically declared and paid monthly. If an investor's
shares are redeemed during the month, accrued but unpaid dividends are paid with
the redemption proceeds. Shares of the fund earn dividends on the business day
the purchase is effective, but not on the business day the redemption is
effective. The fund distributes capital gains, if any, once a year. However, the
fund may make more or fewer payments in a given year, depending on its
investment results and its tax compliance situation. The fund's dividends and
distributions consist of most or all of its net investment income and net
realized capital gains.

Dividends and distributions are reinvested in additional fund shares.
Alternatively, you may instruct your financial professional or J.P. Morgan Funds
Services to have them sent to you by check, credited to a separate account or
invested in another J.P. Morgan Fund.

TAX CONSIDERATIONS

In general, selling shares for cash, exchanging shares and receiving
distributions (whether reinvested or taken in cash) are all taxable events.
These transactions typically create the following tax liabilities for taxable
accounts:

- ------------------------------------------------------------------------------
TRANSACTION                                     TAX STATUS

Income dividends on                             Generally tax exempt
municipal obligations

Income dividends on                             Ordinary income
taxable securities

Short-term capital gains                        Ordinary income
distributions

Long-term capital gains                         Capital gains
distributions

Sales or exchanges of                           Capital gains or
shares owned for more                           losses
than one year

Sales or exchanges of                           Gains are treated as
shares owned for one                            ordinary income;
year or less                                    losses are subject to
                                                special rules

Because long-term capital gains distributions are taxable as capital gains
regardless of how long you have owned your shares, you may want to avoid making
a substantial investment when a fund is about to declare a long-term capital
gains distribution.

Every January, the fund issues tax information on its distributions for the
previous year.

Any investor for whom the fund does not have a valid taxpayer identification
number will be subject to backup withholding for taxes.

The tax considerations described in this section do not apply to tax-deferred
accounts or other non taxable entities.

Because each investor's tax circumstances are unique, please consult your tax
professional about your fund investment.


BUSINESS STRUCTURE

The fund is a series of J.P. Morgan Series Trust, a Massachusetts business
trust. Information about other series or classes is available by calling
1-800-521-5411. In the future, the trustees could create other series or share
classes, which would have different expenses.

MANAGEMENT AND ADMINISTRATION

The trustees are responsible for overseeing all business activities. The
trustees are assisted by Pierpont Group, Inc., which they own and operate on a
cost basis; costs are shared by all funds governed by these trustees. Funds
Distributor, Inc., as co-administrator, along with J.P. Morgan, provides fund
officers. J.P. Morgan, as a co-administrator, oversees the fund's other service
providers.

J.P. Morgan receives the following fees for investment advisory and other
services:


ADVISORY SERVICES                0.15% of the fund's
                                 average daily net assets

ADMINISTRATIVE SERVICES          fund's pro-rata portion of 0.09%
(fee shared with                 of the first $7 billion in J.P. Morgan-advised
Funds Distributor, Inc.)         portfolios, plus 0.04% of
average                          net assets over $7 billion

SHAREHOLDER SERVICES             0.10% of the fund's
                                 average daily net assets

J.P. Morgan may pay fees to certain firms and professionals for providing
recordkeeping or other services in connection with investments in the fund.

YEAR 2000 Fund operations and shareholders could be adversely affected if the
computer systems used by J.P. Morgan, the fund's other service providers and
other entities with computer systems linked to the fund do not properly process
and calculate January 1, 2000 and after date-related information. J.P. Morgan
is working to avoid these problems and to obtain assurances from other service
providers that they are taking similar steps. However, it is not certain that
these actions will be sufficient to prevent these problems from adversely
impacting fund operations and shareholders. In addition, to the extent that
operations of issuers of securities held by the fund are impaired by
date-related problems or prices of securities decline as a result of real or
perceived date-related problems of issuers held by the fund or generally, the
net asset value of the fund will decline.

<PAGE>

RISK AND REWARD ELEMENTS

This table discusses the main elements that make up the fund's overall risk and
reward characteristics.

It also outlines the fund's policies toward various securities, including those
that are designed to help the fund manage risk.

<TABLE>
<CAPTION>

- ----------------------------------------------------------------------------------------------------------------------------------
POTENTIAL RISKS                            POTENTIAL REWARDS                  POLICIES TO BALANCE RISK AND REWARD
- ----------------------------------------------------------------------------------------------------------------------------------

<S>                                        <C>                                <C>
MARKET CONDITIONS
 -  The fund's share price,                -  Bonds have generally            -  Under normal circumstances, the
    yield, and total return will              outperformed money                 fund plans to remain fully invested
    fluctuate in response to                  market investments                 in bonds and other fixed income
    bond market movements                     over the long term,                securities
                                              with less risk than
                                              stocks

 -  The value of most bonds will fall      -  Most bonds will rise            -  The fund seeks to limit risk and
    when interest rates rise; the longer      in value when interest             enhance total return or yields
    a bond's maturity and the lower its       rates fall                         through careful management, sector
    credit quality, the more its                                                 allocation and individual securities
    value typically falls                                                        selection

                                                                              -  With its short duration, the fund seeks 
                                                                                 to limit risk and lower its volatility to
                                                                                 changes in interest rates

- -  Adverse market conditions may from                                         -  During severe market downturns, the fund has 
   time to time cause the fund to take                                           the option of investing up to 100% of assets
   temporary defensive positions that are                                        in money market instruments
   inconsistent with its principal                                                              
   investment strategies and may
   hinder the fund from achieving its
   investment objective

- -  Mortgage-backed and asset-backed         -  Mortgage-backed and            -  J.P. Morgan monitors interest rate trends, 
   securities (securities representing         asset-backed securities           as well as geographic and demographic
   an interest in, or secured by, a            can offer attractive              information related to mortgage-backed
   pool of mortgages or other assets           returns                           securities and mortgage prepayments
   such as receivables) could generate
   capital losses or periods of low
   yields if they are paid off
   substantially earlier or later than
   anticipated.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

- ----------------------------------------------------------------------------------------------------------------------------------
POTENTIAL RISKS                            POTENTIAL REWARDS                  POLICIES TO BALANCE RISK
                                                                              AND REWARD
- ----------------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>                                <C>
CREDIT QUALITY
- -  The default of an issuer would           -  Investment grade bonds         -  The fund maintains its own policies  
   leave the fund with unpaid                  have a lower risk of              for balancing credit quality against
   interest or principal                       default                           potential yields and gains in light of its
                                                                                 investment goals

- -  Junk bonds (those rated BB/Ba            -  Junk bonds offer higher        -  The Fund will invest at least 90% of 
   or lower) have a higher risk of             yields and higher potential       its assets in securities rated
   default, tend to be less liquid,            gains                             investment grade (or the unrated 
   and may be more difficult to value                                            equivalent)
 
                                                                              -  J.P. Morgan develops its own ratings 
                                                                                 of unrated securities and makes a credit
                                                                                 quality determination for unrated
                                                                                 securities

FOREIGN INVESTMENTS
- -  The fund could lose money                -  Foreign bonds, which           -  The fund anticipates that its total foreign
   because of foreign government               represent a major                 investments will not exceed 25% of assets
   actions, political instability,             portion of the world's
   or lack of adequate and                     fixed income securities,
   accurate information                        offer attractive potential
                                               performance and opportunities
                                               for diversification

- -  Currency exchange rate                   -  Favorable exchange rate        -  To the extent that the fund invests in
   movements could reduce gains                movements could generate          foreign bonds, it may manage the currency
   or create losses                            gains or reduce losses            exposure of its foreign investments
                                                                                 relative to its benchmark, and may hedge
                                                                                 a portion of its foreign currency exposure
                                                                                 into the U.S. dollar from time to time
                                                                                 (see also "Derivatives")
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

- ----------------------------------------------------------------------------------------------------------------------------------
POTENTIAL RISKS                            POTENTIAL REWARDS                  POLICIES TO BALANCE RISK
                                                                              AND REWARD
- ----------------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>                                <C>
MANAGEMENT CHOICES
- -  The fund could underperform             -  The fund could outperform       -  J.P. Morgan focuses its active management
   its benchmark due to its                   its benchmark due to               on those areas where it believes its
   sector, securities or                      these same choices                 commitment to research can most enhance
   duration choices                                                              returns and manage risks in a consistent way

DERIVATIVES
- -  Derivatives such as futures,            -  Hedges that correlate           -  The fund uses derivatives, such as
   options, swaps and forward                 well with underlying               futures, options, swaps and forward
   foreign currency contracts                 positions can reduce               foreign currency contracts, for
   that are used for hedging                  or eliminate losses at             hedging and for risk management
   the portfolio or specific                  low costs                          (i.e., to adjust duration or to
   securities may not fully                                                      establish or adjust exposure to
   offset the underlying                   -  The fund could make                particular securities, markets, or
   positions1 and this could                  money and protect                  currencies); risk management may
   result in losses to the fund               against losses if                  include management of the fund's
   that would not have                        management's                       exposure relative to its benchmark;
   otherwise occurred                         analysis proves                    the fund is permitted to enter into
                                              correct                            futures and options transactions,
                                                                                 however, these transactions result in
- -  Derivatives used for risk                                                      taxable gains or losses so it is
   management may not have                 -  Derivatives that                   expected that the fund will utilize
   the intended effects and                   involve leverage                   them infrequently
   may result in losses or                    could generate
   missed opportunities                       substantial gains at
                                              low cost

- -  The counterparty to a
   derivatives contract could
   default

- -  Certain types of derivatives
   involve costs to the funds
   which can reduce returns


- ---------------
1         A futures contract is an agreement to buy or sell a set quantity of an
          underlying instrument at a future date, or to make or receive a cash
          payment based on changes in the value of a securities index. An option
          is the right to buy or sell a set quantity of an underlying instrument
          at a pre-determined price. A swap is a privately negotiated agreement
          to exchange one stream of payments for another. A forward foreign
          currency contract is an obligation to buy or sell a given currency on
          a future date and at a set price.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

- ----------------------------------------------------------------------------------------------------------------------------------
POTENTIAL RISKS                            POTENTIAL REWARDS                  POLICIES TO BALANCE RISK AND REWARD
- ----------------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>                                 <C>
- -  Derivatives that involve                                                    -  The fund only establishes hedges
   leverage could magnify                                                         that it expects will be highly
   losses                                                                         correlated with underlying positions

                                                                               -  While the fund may use derivatives
                                                                                  that incidentally involve leverage, it
                                                                                  does not use them for the specific
                                                                                  purpose of leveraging its portfolio

ILLIQUID HOLDINGS
- -  The fund could have                     -  These holdings may               -  The fund may not invest more than
   difficulty valuing these                   offer more attractive               15% of net assets in illiquid
   holdings precisely                         yields or potential                 holdings
                                              growth than
- -  The fund could be unable to                comparable widely                -  To maintain adequate liquidity to
   sell these holdings at the                 traded securities                   meet redemptions, the fund may
   time or price desired                                                          hold money market instruments
                                                                                  (including repurchase agreements)
                                                                                  and, for temporary or extraordinary
                                                                                  purposes, may borrow from banks
                                                                                  up to 33 1/3% of the value of its
                                                                                  assets

WHEN-ISSUED AND DELAYED
DELIVERY SECURITIES
- -  When the fund buys                     -  The fund can take                 -  The fund uses segregated accounts
   securities before issue or                advantage of                         to offset leverage risk
   for delayed delivery, it                  attractive transaction
   could be exposed to                       opportunities
   leverage risk if it does not
   use segregated accounts

SHORT-TERM TRADING
- -  Increased trading would               -  The fund could                     -  The expected turnover rate for the
   raise the fund's transaction             realize gains in a                    fund is ________%
   costs                                    short period of time


- -  Increased short-term capital          -  The fund could                     -  The fund generally avoids short-
   gains distributions would                protect against losses                term trading, except to take
   raise shareholders' income               if a bond is                          advantage of attractive or
   tax liability                            overvalued and its                    unexpected opportunities or to meet
                                            value later falls                     demands generated by shareholder
                                                                                  activity

</TABLE>

<PAGE>

FOR MORE INFORMATION

For investors who want more information on the fund, the following documents are
available free upon request:

STATEMENT OF ADDITIONAL INFORMATION (SAI) Provides a fuller technical and legal
description of the fund's policies, investment restrictions and business
structure.

This prospectus incorporates the fund's SAI by reference.

Copies of the current versions of these documents, along with other information
about the fund, may be obtained by contacting:

J.P. MORGAN
J.P. Morgan Funds Services                TELEPHONE:  1-800-521-5411
522 Fifth Avenue                          HEARING IMPAIRED:  1-888-468-4015
New York, NY  10036                       EMAIL: [email protected]


Text-only versions of these documents and this prospectus are available, upon
payment of a duplicating fee, from the Public Reference Room of the Securities
and Exchange Commission in Washington, D.C. (1-800-SEC-0330) and may be viewed
on-screen or downloaded from the SEC's Internet site at http://www.sec.gov. The
fund's investment company and 1933 Act registration numbers are 811-07795 and
333-11125.


[RIGHT SIDE BAR]

J.P. MORGAN FUNDS AND THE MORGAN TRADITION

The J.P. Morgan Funds combine a heritage of integrity and financial leadership
with comprehensive and sophisticated analysis and management techniques. Drawing
on J.P. Morgan's extensive experience and depth as an investment manager, the
J.P. Morgan Funds offer a broad array of distinctive opportunities for mutual
fund investors.

JP MORGAN
- -------------------------------------------------------------------------------
J.P. Morgan Funds

ADVISOR                                                DISTRIBUTOR
J.P. Morgan Investment Management Inc.                 Funds Distributor, Inc.
522 Fifth Avenue                                       60 State Street
New York, NY  10036                                    Boston, MA  02109
1-800-521-5411                                         1-800-221-7930


<PAGE>

                         ____________, 1999 PROSPECTUS


J.P. MORGAN TAX AWARE
ENHANCED INCOME FUND



                                          ------------------------------------
                                          Seeking high after tax total returns
                                          by investing primarily in taxable
                                          or tax exempt fixed income
                                          securities




This prospectus contains essential information for anyone investing in the fund.
Please read it carefully and keep it for reference.

As with all mutual funds, the fact that these shares are registered with the
Securities and Exchange Commission does not mean that the Commission approves
them as an investment or guarantees that the information in this prospectus is
correct or adequate. It is a criminal offense to state or suggest otherwise.

                                                                    JP MORGAN

Distributed by Funds Distributor, Inc.

<PAGE>


CONTENTS
                                   J.P. MORGAN SHORT TERM TAX
                                   AWARE FUND
- ------------------------------------------------------------------------------
The fund's goal,             --    Fund Description...........................
investment approach, risks         Investor Expenses..........................
and expenses

                                   FIXED INCOME MANAGEMENT APPROACH
- ------------------------------------------------------------------------------

                             --    J.P. Morgan................................
                                   Fixed income tax aware investing
                                     at J.P. Morgan...........................
                                   Who may want to invest.....................
                                   Fixed income investment process............

                                   YOUR INVESTMENT
- ------------------------------------------------------------------------------

Investing in the J.P. Morgan --    Investing through a financial professional.
Tax Aware Enhanced                 Investing directly.........................
Income Fund
                                   Opening your account.......................
                                   Adding to your account.....................
                                   Selling shares.............................
                                   Account and transaction policies...........
                                   Dividends and distributions................
                                   Tax considerations.........................

                                   FUND DETAILS
- ------------------------------------------------------------------------------

More about risk and the      --    Business structure.........................
fund's business operations         Management and administration..............
                                   Risk and reward elements...................

                                   FOR MORE INFORMATION
- ------------------------------------------------------------------------------

Where to learn more about    --    Back cover
the fund and other J.P.
Morgan funds

<PAGE>

J.P. MORGAN TAX AWARE
ENHANCED INCOME FUND
                                                       TICKER SYMBOL: ________
- ------------------------------------------------------------------------------

GOAL

                 The fund's goal is to provide high after tax total returns,
consistent with low volatility of principal. This goal can be changed without
shareholder approval.

INVESTMENT APPROACH

                 The fund invests primarily in high quality municipal securities
that it believes have the potential to provide high current income that is free
from federal income tax. The fund also may invest in taxable fixed income
securities, including U.S. government and agency securities, domestic and
foreign corporate bonds, asset-backed and mortgage-related securities, and money
market instruments, that it believes have the potential to provide a higher
after tax total return over time. These securities may be of any maturity, but
under normal market conditions the fund's duration (duration is a measure of how
sensitive the securities held by the fund may be to changes in interest rates)
will range between three and eighteen months. The fund's tax aware investment
strategies are described on page ___.

                 Up to 25% of the fund's assets may be invested in foreign
securities. At least 90% of the fund's assets must be invested in securities
that, at the time of purchase, are rated investment grade (BBB/Baa or better) by
a nationally recognized statistical rating organization or are the unrated
equivalent, including at least 75% in securities rated A or better. No more than
10% of the fund's assets may be invested in securities rated BB.

RISK/RETURN SUMMARY

                 The value of your investment in the fund will fluctuate in
response to changes in interest rates. Fund performance also will depend on the
effectiveness of J.P. Morgan's research and the success of the investment
process, which is described on page ___.

                 Although any rise in interest rates is likely to cause a fall
in the price of fixed income securities, the fund's comparatively short duration
is designed to help keep its share price within a relatively narrow range.
Because it seeks to minimize risk, the fund will generally offer less income
and, during periods of declining interest rates, may offer lower total returns
than funds with longer durations. The fund's tax aware strategies may reduce
your taxable income but will not eliminate it. Maximizing after tax returns may
require trade-offs that reduce pre-tax returns. To the extent that the fund
seeks higher returns by investing in non-investment grade bonds, often called
junk bonds, it takes on additional risks, since these bonds are more sensitive
to economic news and their issuers have a less secure financial position. To the
extent the fund invests in foreign securities, it could lose money because of
foreign government actions, political instability, currency fluctuations or lack
of adequate and accurate information.

                 An investment in the fund is not a deposit of any bank and is
not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency. You could lose money if you sell when the fund's share
price is lower than when you invested.

                 For a more detailed discussion of the fund's investments and
their main risks, as well as fund strategies, please see pages ____.

<PAGE>

[RIGHT SIDE BAR]

REGISTRANT: J.P. MORGAN SERIES TRUST
(J.P. MORGAN INSTITUTIONAL TAX AWARE ENHANCED INCOME FUND)

PORTFOLIO MANAGEMENT

The fund's assets are managed by J.P. Morgan, which currently manages over $275
billion, including more than $ _______ billion using the same strategy as the
fund.

The portfolio management team is led by _______________, managing director, who
has been at J.P. Morgan since _____________.

[RIGHT SIDE BAR]

BEFORE YOU INVEST

Investors considering the fund should understand that:

- -   The value of the fund's shares will fluctuate over time. 
- -   There is no assurance that the fund will meet its investment goal.
- -   The fund does not represent a complete investment program.


INVESTOR EXPENSES


The expenses of the fund           ANNUAL FUND OPERATING EXPENSES (%)
are shown at right.  The           ----------------------------------
fund has no sales,                 (expenses that are deducted from fund assets)
redemption, exchange, or                                          Select Shares
account fees, although                                           -------------
some institutions may              Management fees                     0.25
charge you a fee for               Marketing (12b-1) fees              none
shares you buy through             Other expenses                      0.33*
them.  The annual fund            ____________________________________________
expenses are deducted from         Total annual fund
fund assets prior to               operating expenses                  0.58*
performance calculations.         ____________________________________________
"Other expenses" listed in
the fee table are
estimated fees to be paid
by the fund for the
current fiscal year.

- -------------------------
*    After reimbursement, other expenses and total annual fund operating
     expenses will be 0.25% and 0.50%, respectively. This reimbursement
     arrangement can be changed or terminated at any time at the option of
     J.P. Morgan.

<PAGE>


EXPENSE EXAMPLE

The example below is intended
to help you compare the cost of
investing in the fund with the cost of
investing in other mutual funds. The
example assumes: $10,000 initial
investment, 5% return each year, total
operating expenses unchanged, and all
shares sold at the end of each time
period. The example is for comparison
only; the fund's actual return and your
actual costs may be higher or lower.

1 year                         $_____
3 years                        $_____

<PAGE>

FIXED INCOME MANAGEMENT APPROACH
- ------------------------------------------------------------------------

J.P. MORGAN

Known for its commitment to proprietary research and its disciplined investment
strategies, J.P. Morgan is the asset management choice for many of the world's
most respected corporations, financial institutions, governments and
individuals. Today, J.P. Morgan employs over 300 analysts and portfolio managers
around the world and has more than $275 billion in assets under management,
including assets managed by the fund's adviser, J.P. Morgan Investment
Management Inc.

FIXED INCOME TAX AWARE INVESTING AT J.P. MORGAN

The fund is designed to provide a high level of after tax current income, price
stability and liquidity. In doing so, the fund sells securities when the
anticipated performance benefit justifies the resulting tax liability. This
strategy may include purchasing both municipal obligations that are exempt from
federal income tax, and taxable securities, depending on which opportunity J.P.
Morgan determines will generate the highest after tax return. It seeks to
capitalize on fundamental and technical opportunities in the different markets
to enhance return.

<PAGE>

[RIGHT SIDE BAR]

WHO MAY WANT TO INVEST

The fund is designated for investors who:

- -    want to add an income investment to further diversify a portfolio

- -    want an investment whose risk/return potential is higher than that of money
     market funds but generally less than that of longer duration bond funds

- -    want an investment that pays monthly dividends 

- -    want high after tax total returns

The fund is NOT designed for investors who:

- -    are investing for aggressive long-term growth

- -    are investing through a tax-deferred account such as an IRA

FIXED INCOME INVESTMENT PROCESS

In managing the fund, J.P. Morgan employs a three-step process that combines
sector allocation, fundamental research for identifying portfolio securities,
and duration management.

SECTOR ALLOCATION The sector allocation team meets regularly, analyzing the
fundamentals of a broad range of sectors in which the fund may invest. The team
seeks to enhance performance and manage risk by underweighting or overweighting
sectors.

SECURITY SELECTION Relying on the insights of different specialists, including
credit analysts, quantitative researchers, and dedicated fixed income traders,
the portfolio managers make buy and sell decisions according to the fund's goal
and strategy.

DURATION MANAGEMENT Forecasting teams use fundamental economic factors to
develop strategic forecasts of the direction of interest rates. Based on these
forecasts, strategists establish the fund's target duration (a measure of how
sensitive the securities held by the fund may be to changes in interest rates),
typically remaining relatively close to the duration of the market as a whole,
as represented by the fund's benchmark. The strategists closely monitor the fund
and make tactical adjustments as necessary.

<PAGE>

YOUR INVESTMENT

For your convenience, the J.P. Morgan Funds offer several ways to start and add
to fund investments.

INVESTING THROUGH A FINANCIAL PROFESSIONAL

If you work with a financial professional, either at J.P. Morgan or elsewhere,
he or she is prepared to handle your planning and transaction needs. Your
financial professional will be able to assist you in establishing your fund
account, executing transactions and monitoring your investment. If your fund
investment is not held in the name of your financial professional and you prefer
to place a transaction order yourself, please use the instructions for investing
directly.

INVESTING DIRECTLY

Investors may establish accounts without the help of an intermediary by using
the instructions below and at right:

- -    Determine the amount you are investing. The minimum amount for initial
     investments in the fund is $2,500 and for additional investments $500,
     although these minimums may be less for some investors. For more
     information on minimum investments, call 1-800-521-5411.

- -    Complete the application. Please apply now for any account privileges you
     may want to use in the future, in order to avoid the delays associated with
     adding them later on.

- -    Mail in your application, making your initial investment as shown on the
     right.

For answers to any questions, please speak with a  J.P. Morgan Funds Service
representative at 1-800-521-5411.

OPENING YOUR ACCOUNT

BY WIRE

- -    Mail your completed application to the Shareholder Services Agent.

- -    Call the Shareholder Services Agent to obtain an account number and to
     place a purchase order. Funds that are wired without a purchase order will
     be returned uninvested.

- -    After placing your purchase order, instruct your bank to wire the amount of
     your investment to:

     State Street Bank & Trust Company
     ROUTING NUMBER: 011-000-028
     CREDIT:  J.P. Morgan Funds
     ACCOUNT NUMBER:  9904-226-9
     FCC:  Your account number, name of registered owner(s) and fund name.

BY CHECK

- -    Make out a check for the investment amount payable to J.P. Morgan Funds.

- -    Mail the check with your completed application to the Transfer Agent.

BY EXCHANGE

- -    Call the Shareholder Services Agent to effect an exchange.

ADDING TO YOUR ACCOUNT

BY WIRE

- -    Call the Shareholder Services Agent to place a purchase order. Funds that
     are wired without a purchase order will be returned uninvested.

- -    Once you have placed your purchase order, instruct your bank to wire the
     amount of your investment as described above.

BY CHECK

- -    Make out a check for the investment amount payable to J.P. Morgan Funds.

- -    Mail the check with a completed investment slip to the Transfer Agent. If
     you do not have an investment slip, attach a note indicating your account
     number and how much you wish to invest in which fund(s).

BY EXCHANGE

- -    Call the Shareholder Services Agent to effect an exchange.

SELLING SHARES

BY PHONE - WIRE PAYMENT

- -    Call the Shareholder Services Agent to verify that the wire redemption
     privilege is in place on your account. If it is not, a representative can
     help you add it.

- -    Place your wire request. If you are transferring money to a non-Morgan
     account, you will need to provide the representative with the personal
     identification number (PIN) that was provided to you when you opened your
     fund account.

BY PHONE - CHECK PAYMENT

- -    Call the Shareholder Services Agent and place your request. Once your
     request has been verified, a check for the net cash amount, payable to the
     registered owner(s), will be mailed to the address of record. For checks
     payable to any other party or mailed to any other address, please make your
     request in writing (see below).

IN WRITING

- -    Write a letter of instruction that includes the following information: the
     name of the registered owner(s) of the account; the account number; the
     fund name; the amount you want to sell and the recipient's name and address
     or wire information, if different from those of the account registration.

- -    Indicate whether you want any cash proceeds  sent by check or by wire.

- -    Make sure the letter is signed by an authorized party. The Shareholder
     Services Agent may require additional information, such as a signature
     guarantee.

- -    Mail the letter to the Shareholder Services Agent.

BY EXCHANGE

- -    Call the Shareholder Services Agent to effect an exchange.

<PAGE>

ACCOUNT AND TRANSACTION POLICIES

TELEPHONE ORDERS -- The fund accepts telephone orders from all shareholders. To
guard against fraud, the fund requires shareholders to use a PIN, and may record
telephone orders or take other reasonable precautions. However, if the fund does
take such steps to ensure the authenticity of an order, you may bear any loss if
the order later proves fraudulent.

EXCHANGES -- You may exchange shares in the fund for shares in any other J.P.
Morgan or J.P. Morgan Institutional mutual fund at no charge (subject to the
securities laws of your state). When making exchanges, it is important to
observe any applicable minimums. Keep in mind that for tax purposes an exchange
is considered a sale. The fund may alter, limit or suspend its exchange policy
at any time.

BUSINESS DAYS AND NAV CALCULATIONS -- The fund's regular business days and hours
are the same as those of the New York Stock Exchange (NYSE). The fund calculates
its net asset value per share (NAV) every business day as of the close of
trading on the NYSE (normally 4:00 p.m. eastern time). The fund's securities are
typically priced using market quotes or pricing services. When these methods are
not available or do not represent a security's value at the time of pricing, the
security is valued in accordance with the fund's fair valuation procedures.

TIMING OF ORDERS -- Orders to buy or sell shares are executed at the next NAV
calculated after the order has been accepted. Orders are accepted until the
close of trading on the NYSE every business day and are executed the same day,
at that day's NAV. The fund has the right to suspend redemption of shares and to
postpone payment of proceeds for up to seven days or as permitted by law.

TIMING OF SETTLEMENTS -- When you buy shares, you will become the owner of
record when the fund receives your payment, generally the day following
execution. When you sell shares, cash proceeds are generally available the day
following execution and will be forwarded according to your instructions.

When you sell shares that you recently purchased by check, your order will be
executed at the next NAV but the proceeds will not be available until your check
clears. This may take up to 15 days.

<PAGE>

STATEMENTS AND REPORTS -- The fund sends monthly account statements as well as
confirmations after each purchase or sale of shares (except reinvestments).
Every six months the fund sends out an annual or semi-annual report containing
information on its holdings and a discussion of recent and anticipated market
conditions and fund performance.
- -------------------------------------------------------------------------------

Shareholder Services Agent
J.P. MORGAN FUNDS SERVICES
522 Fifth Avenue
New York, NY  10036
1-800-521-5411

Representatives are available 8:00 a.m. to 5:00 p.m.
eastern time on fund business days.

<PAGE>

ACCOUNTS WITH BELOW-MINIMUM BALANCES -- If your account balance falls below the
minimum for 30 days as a result of selling shares (and not because of
performance), the fund reserves the right to request that you buy more shares or
close your account. If your account balance is still below the minimum 60 days
after notification, the fund reserves the right to close out your account and
send the proceeds to the address of record.

DIVIDENDS AND DISTRIBUTIONS

Income dividends are typically declared and paid monthly. If an investor's
shares are redeemed during the month, accrued but unpaid dividends are paid with
the redemption proceeds. Shares of the fund earn dividends on the business day
the purchase is effective, but not on the business day the redemption is
effective. The fund distributes capital gains, if any, once a year. However, the
fund may make more or fewer payments in a given year, depending on its
investment results and its tax compliance situation. The fund's dividends and
distributions consist of most or all of its net investment income and net
realized capital gains.

Dividends and distributions are reinvested in additional fund shares.
Alternatively, you may instruct your financial professional or J.P. Morgan Funds
Services to have them sent to you by check, credited to a separate account or
invested in another J.P. Morgan Fund.

TAX CONSIDERATIONS

In general, selling shares for cash, exchanging shares and receiving
distributions (whether reinvested or taken in cash) are all taxable events.
These transactions typically create the following tax liabilities for taxable
accounts:

- -------------------------------------------------------------------
TRANSACTION                         TAX STATUS

Income dividends on                  Generally tax exempt
municipal obligations

Income dividends on                  Ordinary income
taxable securities

Short-term capital gains             Ordinary income
distributions

Long-term capital gains              Capital gains
distributions

Sales or exchanges of                Capital gains or losses
shares owned for more
than one year

Sales or exchanges of                Gains are treated as 
shares owned for one                 ordinary income; 
year or less                         losses are subject to special rules


Because long-term capital gains distributions are taxable as capital gains
regardless of how long you have owned your shares, you may want to avoid making
a substantial investment when a fund is about to declare a long-term capital
gains distribution.

Every January, the fund issues tax information on its distributions for the
previous year.

Any investor for whom the fund does not have a valid taxpayer identification
number will be subject to backup withholding for taxes.

The tax considerations described in this section do not apply to tax-deferred
accounts or other non-taxable entities.

Because each investor's tax circumstances are unique, please consult your tax
professional about your fund investment.


BUSINESS STRUCTURE

The fund is a series of J.P. Morgan Series Trust, a Massachusetts business
trust. Information about other series or classes is available by calling
1-800-521-5411. In the future, the trustees could create other series or share
classes, which would have different expenses.

MANAGEMENT AND ADMINISTRATION

The trustees are responsible for overseeing all business activities. The
trustees are assisted by Pierpont Group, Inc., which they own and operate on a
cost basis; costs are shared by all funds governed by these trustees. Funds
Distributor, Inc., as co-administrator, along with J.P. Morgan, provides fund
officers. J.P. Morgan, as a co-administrator, oversees the fund's other service
providers.

J.P. Morgan receives the following fees for investment advisory
and other services:


ADVISORY SERVICES                0.25% of the fund's
                                 average daily net assets

ADMINISTRATIVE SERVICES          fund's pro-rata portion of 0.09%
(fee shared with                 of the first $7 billion in J.P. Morgan-advised
Funds Distributor, Inc.)         portfolios, plus 0.04% of average
                                 net assets over $7 billion

SHAREHOLDER SERVICES             0.25% of the fund's
                                 average daily net assets

J.P. Morgan may pay fees to certain firms and professionals for providing
recordkeeping or other services in connection with investments in the fund.

YEAR 2000 Fund operations and shareholders could be adversely affected if the
computer systems used by J.P. Morgan, the fund's other service providers and
other entities with computer systems linked to the fund do not properly process
and calculate January 1, 2000 and after date-related information. J.P. Morgan
is working to avoid these problems and to obtain assurances from other service
providers that they are taking similar steps. However, it is not certain that
these actions will be sufficient to prevent these problems from adversely
impacting fund operations and shareholders. In addition, to the extent that
operations of issuers of securities held by the fund are impaired by
date-related problems or prices of securities decline as a result of real or
perceived date-related problems of issuers held by the fund or generally, the
net asset value of the fund will decline.

<PAGE>

RISK AND REWARD ELEMENTS

This table discusses the main elements that make up the fund's overall risk and
reward characteristics.

It also outlines the fund's policies toward various securities, including those
that are designed to help the fund manage risk.

<TABLE>
<CAPTION>

- ----------------------------------------------------------------------------------------------------------------------------------
POTENTIAL RISKS                            POTENTIAL REWARDS                  POLICIES TO BALANCE RISK AND REWARD
- ----------------------------------------------------------------------------------------------------------------------------------

<S>                                        <C>                                <C>
MARKET CONDITIONS
 -  The fund's share price,                -  Bonds have generally            -  Under normal circumstances, the
    yield, and total return will              outperformed money                 fund plans to remain fully invested
    fluctuate in response to                  market investments                 in bonds and other fixed income
    bond market movements                     over the long term,                securities
                                              with less risk than
                                              stocks

 -  The value of most bonds will fall      -  Most bonds will rise            -  The fund seeks to limit risk and
    when interest rates rise; the longer      in value when interest             enhance total return or yields
    a bond's maturity and the lower its       rates fall                         through careful management, sector
    credit quality, the more its                                                 allocation and individual securities
    value typically falls                                                        selection

                                                                              -  With its short duration, the fund seeks 
                                                                                 to limit risk and lower its volatility to
                                                                                 changes in interest rates

- -  Adverse market conditions may from                                         -  During severe market downturns, the fund has 
   time to time cause the fund to take                                           the option of investing up to 100% of assets
   temporary defensive positions that are                                        in money market instruments
   inconsistent with its principal                                                              
   investment strategies and may
   hinder the fund from achieving its
   investment objective

- -  Mortgage-backed and asset-backed         -  Mortgage-backed and            -  J.P. Morgan monitors interest rate trends, 
   securities (securities representing         asset-backed securities           as well as geographic and demographic
   an interest in, or secured by, a            can offer attractive              information related to mortgage-backed
   pool of mortgages or other assets           returns                           securities and mortgage prepayments
   such as receivables) could generate
   capital losses or periods of low
   yields if they are paid off
   substantially earlier or later than
   anticipated.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

- ----------------------------------------------------------------------------------------------------------------------------------
POTENTIAL RISKS                            POTENTIAL REWARDS                  POLICIES TO BALANCE RISK
                                                                              AND REWARD
- ----------------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>                                <C>
CREDIT QUALITY
- -  The default of an issuer would           -  Investment grade bonds         -  The fund maintains its own policies  
   leave the fund with unpaid                  have a lower risk of              for balancing credit quality against
   interest or principal                       default                           potential yields and gains in light of its
                                                                                 investment goals

- -  Junk bonds (those rated BB/Ba            -  Junk bonds offer higher        -  The Fund will invest at least 90% of 
   or lower) have a higher risk of             yields and higher potential       its assets in securities rated
   default, tend to be less liquid,            gains                             investment grade (or the unrated 
   and may be more difficult to value                                            equivalent)
 
                                                                              -  J.P. Morgan develops its own ratings 
                                                                                 of unrated securities and makes a credit
                                                                                 quality determination for unrated
                                                                                 securities

FOREIGN INVESTMENTS
- -  The fund could lose money                -  Foreign bonds, which           -  The fund anticipates that its total foreign
   because of foreign government               represent a major                 investments will not exceed 25% of assets
   actions, political instability,             portion of the world's
   or lack of adequate and                     fixed income securities,
   accurate information                        offer attractive potential
                                               performance and opportunities
                                               for diversification

- -  Currency exchange rate                   -  Favorable exchange rate        -  To the extent that the fund invests in
   movements could reduce gains                movements could generate          foreign bonds, it may manage the currency
   or create losses                            gains or reduce losses            exposure of its foreign investments
                                                                                 relative to its benchmark, and may hedge
                                                                                 a portion of its foreign currency exposure
                                                                                 into the U.S. dollar from time to time
                                                                                 (see also "Derivatives")
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

- ----------------------------------------------------------------------------------------------------------------------------------
POTENTIAL RISKS                            POTENTIAL REWARDS                  POLICIES TO BALANCE RISK
                                                                              AND REWARD
- ----------------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>                                <C>
MANAGEMENT CHOICES
- -  The fund could underperform             -  The fund could outperform       -  J.P. Morgan focuses its active management
   its benchmark due to its                   its benchmark due to               on those areas where it believes its
   sector, securities or                      these same choices                 commitment to research can most enhance
   duration choices                                                              returns and manage risks in a consistent way

DERIVATIVES
- -  Derivatives such as futures,            -  Hedges that correlate           -  The fund uses derivatives, such as
   options, swaps and forward                 well with underlying               futures, options, swaps and forward
   foreign currency contracts                 positions can reduce               foreign currency contracts, for
   that are used for hedging                  or eliminate losses at             hedging and for risk management
   the portfolio or specific                  low costs                          (i.e., to adjust duration or to
   securities may not fully                                                      establish or adjust exposure to
   offset the underlying                   -  The fund could make                particular securities, markets, or
   positions1 and this could                  money and protect                  currencies); risk management may
   result in losses to the fund               against losses if                  include management of the fund's
   that would not have                        management's                       exposure relative to its benchmark;
   otherwise occurred                         analysis proves                    the fund is permitted to enter into
                                              correct                            futures and options transactions,
                                                                                 however, these transactions result in
- -  Derivatives used for risk                                                      taxable gains or losses so it is
   management may not have                 -  Derivatives that                   expected that the fund will utilize
   the intended effects and                   involve leverage                   them infrequently
   may result in losses or                    could generate
   missed opportunities                       substantial gains at
                                              low cost

- -  The counterparty to a
   derivatives contract could
   default

- -  Certain types of derivatives
   involve costs to the funds
   which can reduce returns


- ---------------
1         A futures contract is an agreement to buy or sell a set quantity of an
          underlying instrument at a future date, or to make or receive a cash
          payment based on changes in the value of a securities index. An option
          is the right to buy or sell a set quantity of an underlying instrument
          at a pre-determined price. A swap is a privately negotiated agreement
          to exchange one stream of payments for another. A forward foreign
          currency contract is an obligation to buy or sell a given currency on
          a future date and at a set price.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

- ----------------------------------------------------------------------------------------------------------------------------------
POTENTIAL RISKS                            POTENTIAL REWARDS                  POLICIES TO BALANCE RISK AND REWARD
- ----------------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>                                 <C>
- -  Derivatives that involve                                                    -  The fund only establishes hedges
   leverage could magnify                                                         that it expects will be highly
   losses                                                                          correlated with underlying positions

                                                                               -  While the fund may use derivatives
                                                                                  that incidentally involve leverage, it
                                                                                  does not use them for the specific
                                                                                  purpose of leveraging its portfolio

ILLIQUID HOLDINGS
- -  The fund could have                     -  These holdings may               -  The fund may not invest more than
   difficulty valuing these                   offer more attractive               15% of net assets in illiquid
   holdings precisely                         yields or potential                 holdings
                                              growth than
- -  The fund could be unable to                comparable widely                -  To maintain adequate liquidity to
   sell these holdings at the                 traded securities                   meet redemptions, the fund may
   time or price desired                                                          hold money market instruments
                                                                                  (including repurchase agreements)
                                                                                  and, for temporary or extraordinary
                                                                                  purposes, may borrow from banks
                                                                                  up to 33 1/3% of the value of its
                                                                                  assets

WHEN-ISSUED AND DELAYED
DELIVERY SECURITIES
- -  When the fund buys                     -  The fund can take                 -  The fund uses segregated accounts
   securities before issue or                advantage of                         to offset leverage risk
   for delayed delivery, it                  attractive transaction
   could be exposed to                       opportunities
   leverage risk if it does not
   use segregated accounts

SHORT-TERM TRADING
- -  Increased trading would               -  The fund could                     -  The expected turnover rate for the
   raise the fund's transaction             realize gains in a                    fund is ________%
   costs                                    short period of time

- -  Increased short-term capital          -  The fund could                     -  The fund generally avoids short-
   gains distributions would                protect against losses                term trading, except to take
   raise shareholders' income               if a bond is                          advantage of attractive or
   tax liability                            overvalued and its                    unexpected opportunities or to meet
                                            value later falls                     demands generated by shareholder
                                                                                  activity
</TABLE>

<PAGE>

FOR MORE INFORMATION

For investors who want more information on the fund, the following documents are
available free upon request:

STATEMENT OF ADDITIONAL INFORMATION (SAI) Provides a fuller technical and legal
description of the fund's policies, investment restrictions and business
structure.

This prospectus incorporates the fund's SAI by reference.

Copies of the current versions of these documents, along with other information
about the fund, may be obtained by contacting:

J.P. MORGAN
J.P. Morgan Funds Services               TELEPHONE:  1-800-521-5411
522 Fifth Avenue                         HEARING IMPAIRED:  1-888-468-4015
New York, NY  10036                      EMAIL:  [email protected]


Text-only versions of these documents and this prospectus are available, upon
payment of a duplicating fee, from the Public Reference Room of the Securities
and Exchange Commission in Washington, D.C. (1-800-SEC-0330) and may be viewed
on-screen or downloaded from the SEC's Internet site at http://www.sec.gov. The
fund's investment company and 1933 Act registration numbers are 811-07795 and
333-11125.


[RIGHT SIDE BAR]

J.P. MORGAN FUNDS AND THE MORGAN TRADITION

The J.P. Morgan Funds combine a heritage of integrity and financial leadership
with comprehensive and sophisticated analysis and management techniques. Drawing
on J.P. Morgan's extensive experience and depth as an investment manager, the
J.P. Morgan Funds offer a broad array of distinctive opportunities for mutual
fund investors.

JP MORGAN
- ------------------------------------------------------------------------------
J.P. Morgan Funds

ADVISOR                                             DISTRIBUTOR
J.P. Morgan Investment Management Inc.              Funds Distributor, Inc.
522 Fifth Avenue                                    60 State Street
New York, NY  10036                                 Boston, MA  02109
1-800-521-5411                                      1-800-221-7930


<PAGE>

                            J.P. MORGAN SERIES TRUST


            J.P. MORGAN INSTITUTIONAL TAX AWARE ENHANCED INCOME FUND


                       STATEMENT OF ADDITIONAL INFORMATION



                                ___________, 1999


THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS BUT CONTAINS
ADDITIONAL INFORMATION WHICH SHOULD BE READ IN CONJUNCTION WITH THE FUND'S
PROSPECTUS DATED ___________, 1999, AS SUPPLEMENTED FROM TIME TO TIME. THE
FUND'S PROSPECTUS IS AVAILABLE, WITHOUT CHARGE, UPON REQUEST FROM FUNDS
DISTRIBUTOR, INC., 60 STATE STREET, SUITE 1300, BOSTON, MASSACHUSETTS 02109,
ATTENTION: J.P. MORGAN SERIES TRUST (800) 221-7930.


<PAGE>


                                Table of Contents

PAGE

GENERAL......................................................................1
INVESTMENT OBJECTIVES AND POLICIES...........................................1
INVESTMENT RESTRICTIONS.....................................................25
TRUSTEES AND OFFICERS.......................................................27
INVESTMENT ADVISOR..........................................................31
DISTRIBUTOR.................................................................33
CO-ADMINISTRATOR............................................................34
SERVICES AGENT..............................................................35
CUSTODIAN AND TRANSFER AGENT................................................35
SHAREHOLDER SERVICING.......................................................35
FINANCIAL PROFESSIONALS.....................................................37
INDEPENDENT ACCOUNTANTS.....................................................37
EXPENSES....................................................................37
PURCHASE OF SHARES..........................................................38
REDEMPTION OF SHARES........................................................39
EXCHANGE OF SHARES..........................................................40
DIVIDENDS AND DISTRIBUTIONS.................................................40
NET ASSET VALUE.............................................................41
PERFORMANCE DATA............................................................42
PORTFOLIO TRANSACTIONS......................................................43
MASSACHUSETTS TRUST.........................................................45
DESCRIPTION OF SHARES.......................................................45
TAXES.......................................................................46
ADDITIONAL INFORMATION......................................................50
APPENDIX A - DESCRIPTION OF SECURITY RATINGS................................52

<PAGE>

GENERAL

                 J.P. Morgan Institutional Tax Aware Enhanced Income Fund (the
"Fund") is a series of J.P. Morgan Series Trust, an open-end management
investment company organized as a Massachusetts business trust (the "Trust"). To
date, the Trustees of the Trust have authorized the issuance of two classes of
shares--Institutional Shares and Select Shares.

                 This Statement of Additional Information provides additional
information with respect to the Fund and should be read in conjunction with the
Fund's current prospectus (the "Prospectus"). Capitalized terms not otherwise
defined herein have the meanings assigned to them in the Prospectus. The Trust's
executive offices are located at 60 State Street, Suite 1300, Boston,
Massachusetts 02109.

                 The Fund is advised by J.P. Morgan Investment Management Inc.
("JPMIM" or the "Advisor").

                 Shares of the Fund are not deposits or obligations of, or
guaranteed or endorsed by any bank. Shares of the Fund are not federally insured
by the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any
other governmental agency. An investment in the Fund is subject to risk that may
cause the value of the investment to fluctuate, and at the time it is redeemed,
be higher or lower than the amount originally invested.


INVESTMENT OBJECTIVES AND POLICIES

                 The following discussion supplements the information in the
Prospectus regarding the investment objective and policies of the Fund.

                 The Fund is designed for investors seeking high after tax total
returns, consistent with low volatility of principal. The Fund invests primarily
in high quality municipal obligations that the Advisor believes have the
potential to provide high current income that is free from federal personal
income tax. The Fund also may invest in taxable fixed income securities that the
Advisor believes have the potential to provide a high after tax total return
over time.

                 INVESTMENT PROCESS FOR THE FUND

                 DURATION MANAGEMENT: Duration will be actively managed based on
internal economic research, forecasts of interest rates and their volatility,
and the shape of the yield curve. The portfolio's average maturity is generally
managed from 90 days to 18 months.

                 SECTOR ALLOCATION: The Advisor's Fixed Income Group recommends
sector allocation strategies. Within each sector, the Advisor utilizes option
adjusted spread analysis as one measure of sector attractiveness. Current
spreads also are judged against their historical norm. The Advisor utilizes
market and credit research to assess fair value and the likelihood of sector
spreads widening or narrowing.

                 SECURITY SELECTION: The Advisor utilizes its extensive credit
and quantitative research, portfolio management and trading capabilities across
all fixed income markets to select securities. Securities will be selected based
upon the issuer's ability to return principal at a rate offering an attractive
return when compared to similar securities available in the marketplace.

                 The various types of securities in which the Fund may invest
are described below.

TAX EXEMPT OBLIGATIONS

                 The Fund invests primarily in tax exempt obligations. A
description of the various types of tax exempt obligations which may be
purchased by the Fund appears below. See "Quality and Diversification
Requirements."

                 MUNICIPAL BONDS. Municipal bonds are debt obligations issued by
the states, territories and possessions of the United States and the District of
Columbia, by their political subdivisions and by duly constituted authorities
and corporations. For example, states, territories, possessions and
municipalities may issue municipal bonds to raise funds for various public
purposes such as airports, housing, hospitals, mass transportation, schools,
water and sewer works. They may also issue municipal bonds to refund outstanding
obligations and to meet general operating expenses. Public authorities issue
municipal bonds to obtain funding for privately operated facilities, such as
housing and pollution control facilities, for industrial facilities or for water
supply, gas, electricity or waste disposal facilities.

                 Municipal bonds may be general obligation or revenue bonds.
General obligation bonds are secured by the issuer's pledge of its full faith,
credit and taxing power for the payment of principal and interest. Revenue bonds
are payable from revenues derived from particular facilities, from the proceeds
of a special excise tax or from other specific revenue sources. They are not
generally payable from the general taxing power of a municipality.

                 MUNICIPAL NOTES. The Fund also may invest in municipal notes of
various types, including notes issued in anticipation of receipt of taxes, the
proceeds of the sale of bonds, other revenues or grant proceeds, as well as
municipal commercial paper and municipal demand obligations such as variable
rate demand notes and master demand obligations.

                 Municipal notes are short-term obligations with a maturity at
the time of issuance ranging from six months to five years. The principal types
of municipal notes include tax anticipation notes, bond anticipation notes,
revenue anticipation notes, grant anticipation notes and project notes. Notes
sold in anticipation of collection of taxes, a bond sale, or receipt of other
revenues are usually general obligations of the issuing municipality or agency.

                 Municipal commercial paper typically consists of very
short-term unsecured negotiable promissory notes that are sold to meet seasonal
working capital or interim construction financing needs of a municipality or
agency. While these obligations are intended to be paid from general revenues or
refinanced with long-term debt, they frequently are backed by letters of credit,
lending agreements, note repurchase agreements or other credit facility
agreements offered by banks or institutions.

                 Municipal demand obligations are subdivided into two types:
variable rate demand notes and master demand obligations.

                 Variable rate demand notes are tax exempt municipal obligations
or participation interests that provide for a periodic adjustment in the
interest rate paid on the notes. They permit the holder to demand payment of the
notes, or to demand purchase of the notes at a purchase price equal to the
unpaid principal balance, plus accrued interest either directly by the issuer or
by drawing on a bank letter of credit or guaranty issued with respect to such
note. The issuer of the municipal obligation may have a corresponding right to
prepay at its discretion the outstanding principal of the note plus accrued
interest upon notice comparable to that required for the holder to demand
payment. The variable rate demand notes in which the Funds may invest are
payable, or are subject to purchase, on demand usually on notice of seven
calendar days or less. The terms of the notes provide that interest rates are
adjustable at intervals ranging from daily to six months, and the adjustments
are based upon the prime rate of a bank or other appropriate interest rate index
specified in the respective notes. Variable rate demand notes are valued at
amortized cost; no value is assigned to the right of each Fund to receive the
par value of the obligation upon demand or notice.

                 Master demand obligations are tax exempt municipal obligations
that provide for a periodic adjustment in the interest rate paid and permit
daily changes in the amount borrowed. The interest on such obligations is, in
the opinion of counsel for the borrower, excluded from gross income for federal
income tax purposes. For a description of the attributes of master demand
obligations, see "Money Market Instruments" below. Although there is no
secondary market for master demand obligations, such obligations are considered
by the Funds to be liquid because they are payable upon demand. The Funds have
no specific percentage limitations on investments in master demand obligations.

TAXABLE FIXED INCOME INVESTMENTS

                 The Fund also may invest in a broad range of taxable fixed
income securities of domestic and foreign corporate and government issuers. The
corporate securities in which the Fund may invest include debt securities of
various types and maturities, e.g., debentures, notes, mortgage securities,
equipment trust certificates and other collateralized securities and zero coupon
securities. Collateralized securities are backed by a pool of assets such as
loans or receivables which generate cash flow to cover the payments due on the
securities. Collateralized securities are subject to certain risks, including a
decline in the value of the collateral backing the security, failure of the
collateral to generate the anticipated cash flow or in certain cases more rapid
prepayment because of events affecting the collateral, such as accelerated
prepayment of mortgages or other loans backing these securities or destruction
of equipment subject to equipment trust certificates. In the event of any such
prepayment, the Fund will be required to reinvest the proceeds of prepayments at
interest rates prevailing at the time of reinvestment, which may be lower. In
addition, the value of zero coupon securities which do not pay interest is more
volatile than that of interest bearing debt securities with the same maturity.

CORPORATE BONDS AND OTHER DEBT SECURITIES

                 The Fund may invest in bonds and other debt securities of
domestic and foreign issuers to the extent consistent with its investment
objective and policies. A description of these investments appears below. See
"Quality and Diversification Requirements." For information on short-term
investments in these securities, see "Money Market Instruments."

                 MORTGAGE-BACKED SECURITIES. The Fund may invest in
mortgage-backed securities. Each mortgage pool underlying mortgage-backed
securities consists of mortgage loans evidenced by promissory notes secured by
first mortgages or first deeds of trust or other similar security instruments
creating a first lien on owner occupied and non-owner occupied one-unit to
four-unit residential properties, multifamily (i.e., five or more) properties,
agriculture properties, commercial properties and mixed use properties. The
investment characteristics of adjustable and fixed rate mortgage-backed
securities differ from those of traditional fixed income securities. The major
differences include the payment of interest and principal on mortgage-backed
securities on a more frequent (usually monthly) schedule and the possibility
that principal may be prepaid at any time due to prepayments on the underlying
mortgage loans or other assets. These differences can result in significantly
greater price and yield volatility than is the case with traditional fixed
income securities. As a result, a faster than expected prepayment rate will
reduce both the market value and the yield to maturity from those which were
anticipated. A prepayment rate that is slower than expected will have the
opposite effect of increasing yield to maturity and market value.

                 GOVERNMENT GUARANTEED MORTGAGE-BACKED SECURITIES. Government
National Mortgage Association mortgage-backed certificates ("Ginnie Maes") are
supported by the full faith and credit of the United States. Certain other U.S.
Government securities, issued or guaranteed by federal agencies or government
sponsored enterprises, are not supported by the full faith and credit of the
United States, but may be supported by the right of the issuer to borrow from
the U.S. Treasury. These securities include obligations of instrumentalities
such as the Federal Home Loan Mortgage Corporation ("Freddie Macs") and the
Federal National Mortgage Association ("Fannie Maes"). No assurance can be given
that the U.S. Government will provide financial support to these federal
agencies, authorities, instrumentalities and government sponsored enterprises in
the future.

                 There are several types of guaranteed mortgage-backed
securities currently available, including guaranteed mortgage pass-through
certificates and multiple class securities, which include guaranteed real estate
mortgage investment conduit certificates ("REMIC Certificates"), other
collateralized mortgage obligations ("CMOs") and stripped mortgage-backed
securities.

                 Mortgage pass-through securities are fixed or adjustable rate
mortgage-backed securities which provide for monthly payments that are a
"pass-through" of the monthly interest and principal payments (including any
prepayments) made by the individual borrowers on the pooled mortgage loans, net
of any fees or other amounts paid to any guarantor, administrator and/or
servicer of the underlying mortgage loans.

                 Multiple class securities include CMOs and REMIC Certificates
issued by U.S. Government agencies, instrumentalities (such as Fannie Mae) and
sponsored enterprises (such as Freddie Mac) or by trusts formed by private
originators of, or investors in, mortgage loans, including savings and loan
associations, mortgage bankers, commercial banks, insurance companies,
investment banks and special purpose subsidiaries of the foregoing. In general,
CMOs are debt obligations of a legal entity that are collateralized by, and
multiple class mortgage-backed securities represent direct ownership interests
in, a pool of mortgage loans or mortgaged-backed securities and payments on
which are used to make payments on the CMOs or multiple class mortgage-backed
securities.

                 CMOs and guaranteed REMIC Certificates issued by Fannie Mae and
Freddie Mac are types of multiple class mortgage-backed securities. Investors
may purchase beneficial interests in REMICs, which are known as "regular"
interests or "residual" interests. The Funds do not intend to purchase residual
interests in REMICs. The REMIC Certificates represent beneficial ownership
interests in a REMIC trust, generally consisting of mortgage loans or Fannie
Mae, Freddie Mac or Ginnie Mae guaranteed mortgage-backed securities (the
"Mortgage Assets"). The obligations of Fannie Mae and Freddie Mac under their
respective guaranty of the REMIC Certificates are obligations solely of Fannie
Mae and Freddie Mac, respectively.

                 CMOs and REMIC Certificates are issued in multiple classes.
Each class of CMOs or REMIC Certificates, often referred to as a "tranche," is
issued at a specific adjustable or fixed interest rate and must be fully retired
no later than its final distribution date. Principal prepayments on the assets
underlying the CMOs or REMIC Certificates may cause some or all of the classes
of CMOs or REMIC Certificates to be retired substantially earlier than their
final scheduled distribution dates. Generally, interest is paid or accrues on
all classes of CMOs or REMIC Certificates on a monthly basis.

                 STRIPPED MORTGAGE-BACKED SECURITIES. Stripped mortgage-backed
securities ("SMBS") are derivative multiclass mortgage securities, issued or
guaranteed by the U.S. Government, its agencies or instrumentalities or by
private issuers. Although the market for such securities is increasingly liquid,
privately issued SMBS may not be readily marketable and will be considered
illiquid for purposes of the Fund's limitation on investments in illiquid
securities. The Advisor may determine that SMBS which are U.S. Government
securities are liquid for purposes of the Fund's limitation on investments in
illiquid securities in accordance with procedures adopted by the Board of
Trustees. The market value of the class consisting entirely of principal
payments generally is unusually volatile in response to changes in interest
rates. The yields on a class of SMBS that receives all or most of the interest
from Mortgage Assets are generally higher than prevailing market yields on other
mortgage-backed securities because their cash flow patterns are more volatile
and there is a greater risk that the initial investment will not be fully
recouped.

                 MORTGAGES (DIRECTLY HELD). The Fund may invest directly in
mortgages. Mortgages are debt instruments secured by real property. Unlike
mortgage-backed securities, which generally represent an interest in a pool of
mortgages, direct investments in mortgages involve prepayment and credit risks
of an individual issuer and real property. Consequently, these investments
require different investment and credit analysis by the Advisor.

                 The directly placed mortgages in which the Fund invests may
include residential mortgages, multifamily mortgages, mortgages on cooperative
apartment buildings, commercial mortgages, and sale-leasebacks. These
investments are backed by assets such as office buildings, shopping centers,
retail stores, warehouses, apartment buildings and single-family dwellings. In
the event that the Fund forecloses on any non-performing mortgage, and acquires
a direct interest in the real property, the Fund will be subject to the risks
generally associated with the ownership of real property. There may be
fluctuations in the market value of the foreclosed property and its occupancy
rates, rent schedules and operating expenses. There may also be adverse changes
in local, regional or general economic conditions, deterioration of the real
estate market and the financial circumstances of tenants and sellers,
unfavorable changes in zoning, building environmental and other laws, increased
real property taxes, rising interest rates, reduced availability and increased
cost of mortgage borrowings, the need for unanticipated renovations, unexpected
increases in the cost of energy, environmental factors, acts of God and other
factors which are beyond the control of the Fund or the Advisor. Hazardous or
toxic substances may be present on, at or under the mortgaged property and
adversely affect the value of the property. In addition, the owners of property
containing such substances may be held responsible, under various laws, for
containing, monitoring, removing or cleaning up such substances. The presence of
such substances may also provide a basis for other claims by third parties.
Costs of clean-up or of liabilities to third parties may exceed the value of the
property. In addition, these risks may be uninsurable. In light of these and
similar risks, it may be impossible to dispose profitably of properties in
foreclosure.

                 ZERO COUPON, PAY-IN-KIND AND DEFERRED PAYMENT SECURITIES. Zero
coupon securities are securities that are sold at a discount to par value and on
which interest payments are not made during the life of the security. Upon
maturity, the holder is entitled to receive the par value of the security.
Pay-in-kind securities are securities that have interest payable by delivery of
additional securities. Upon maturity, the holder is entitled to receive the
aggregate par value of the securities. The Fund accrues income with respect to
zero coupon and pay-in-kind securities prior to the receipt of cash payments.
Deferred payment securities are securities that remain zero coupon securities
until a predetermined date, at which time the stated coupon rate becomes
effective and interest becomes payable at regular intervals. While interest
payments are not made on such securities, holders of such securities are deemed
to have received "phantom income." Because the Fund will distribute "phantom
income" to shareholders, to the extent that shareholders elect to receive
dividends in cash rather than reinvesting such dividends in additional shares,
the Fund will have fewer assets with which to purchase income producing
securities. Zero coupon, pay-in-kind and deferred payment securities may be
subject to greater fluctuation in value and lesser liquidity in the event of
adverse market conditions than comparably rated securities paying cash interest
at regular interest payment periods.

                 ASSET-BACKED SECURITIES. Asset-backed securities directly or
indirectly represent a participation interest in, or are secured by and payable
from, a stream of payments generated by particular assets such as motor vehicle
or credit card receivables or other asset-backed securities collateralized by
such assets. Payments of principal and interest may be guaranteed up to certain
amounts and for a certain time period by a letter of credit issued by a
financial institution unaffiliated with the entities issuing the securities. The
asset-backed securities in which the Fund may invest are subject to the Fund's
overall credit requirements. However, asset-backed securities, in general, are
subject to certain risks. Most of these risks are related to limited interests
in applicable collateral. For example, credit card debt receivables are
generally unsecured and the debtors are entitled to the protection of a number
of state and federal consumer credit laws, many of which give such debtors the
right to set off certain amounts on credit card debt thereby reducing the
balance due. Additionally, if the letter of credit is exhausted, holders of
asset-backed securities may also experience delays in payments or losses if the
full amounts due on underlying sales contracts are not realized. Because
asset-backed securities are relatively new, the market experience in these
securities is limited and the market's ability to sustain liquidity through all
phases of the market cycle has not been tested.

                 CORPORATE FIXED INCOME SECURITIES. The Fund may invest in
publicly and privately issued debt obligations of U.S. and non-U.S.
corporations, including obligations of industrial, utility, banking and other
financial issuers. These securities are subject to the risk of an issuer's
inability to meet principal and interest payments on the obligation and may also
be subject to price volatility due to such factors as market interest rates,
market perception of the creditworthiness of the issuer and general market
liquidity.

FOREIGN INVESTMENTS

                 The Fund may invest up to 20% of its total assets at the time
of purchase, in securities of foreign issuers. This 20% limit is designed to
accommodate the increased globalization of companies as well as the
re-domiciling of companies for tax treatment purposes. It is not currently
expected to be used to increase direct non-U.S. exposure.

                 Investors should realize that the value of the Fund's
investments in foreign securities may be adversely affected by changes in
political or social conditions, diplomatic relations, confiscatory taxation,
expropriation, nationalization, limitation on the removal of funds or assets, or
imposition of (or change in) exchange control or tax regulations in those
foreign countries. In addition, changes in government administrations or
economic or monetary policies in the United States or abroad could result in
appreciation or depreciation of portfolio securities and could favorably or
unfavorably affect the Fund's operations. Furthermore, the economies of
individual foreign nations may differ from the U.S. economy, whether favorably
or unfavorably, in areas such as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payments position; it may also be more difficult to obtain and enforce a
judgment against a foreign issuer. Any foreign investments made by the Fund must
be made in compliance with U.S. and foreign currency restrictions and tax laws
restricting the amounts and types of foreign investments.

                 Foreign investments may be made directly in securities of
foreign issuers or in the form of American Depository Receipts ("ADRs"),
European Depository Receipts ("EDRs") and Global Depository Receipts ("GDRs") or
other similar securities of foreign issuers. ADRs are securities typically
issued by a U.S. financial institution (a "depository") that evidence ownership
interests in a security or a pool of securities issued by a foreign issuer and
deposited with the depository. ADRs include American Depository Shares and New
York Shares. EDRs are receipts issued by a European financial institution. GDRs
(sometimes referred to as Continental Depository Receipts ("CDRs")) are
securities typically issued by a non-U.S. financial institution that evidence
ownership interests in a security or a pool of securities issued by either a
U.S. or foreign issuer. ADRs, EDRs, GDRs and CDRs may be available for
investment through "sponsored" or "unsponsored" facilities. A sponsored facility
is established jointly by the issuer of the security underlying the receipt and
a depository, whereas an unsponsored facility may be established by a depository
without participation by the issuer of the receipt's underlying security.

                 Holders of an unsponsored depository receipt generally bear all
costs of the unsponsored facility. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of the receipts with respect to the deposited securities.

                 Since investments in foreign securities may involve foreign
currencies, the value of the Fund's assets as measured in U.S. dollars may be
affected favorably or unfavorably by changes in currency rates and in exchange
control regulations, including currency blockage.

                 SOVEREIGN FIXED INCOME SECURITIES. The Fund may invest in fixed
income securities issued or guaranteed by a foreign sovereign government or its
agencies, authorities or political subdivisions. Investment in sovereign fixed
income securities involves special risks not present in corporate fixed income
securities. The issuer of the sovereign debt or the governmental authorities
that control the repayment of the debt may be unable or unwilling to repay
principal or interest when due, and the Fund may have limited recourse in the
event of a default. During periods of economic uncertainty, the market prices of
sovereign debt, and the Fund's net asset value, may be more volatile than prices
of U.S. debt obligations. In the past, certain foreign countries have
encountered difficulties in servicing their debt obligations, withheld payments
of principal and interest and declared moratoria on the payment of principal and
interest on their sovereign debts.

                 A sovereign debtor's willingness or ability to repay principal
and pay interest in a timely manner may be affected by, among other factors, its
cash flow situation, the extent of its foreign currency reserves, the
availability of sufficient foreign exchange, the relative size of the debt
service burden, the sovereign debtor's policy toward international lenders and
local political constraints. Sovereign debtors may also be dependent on expected
disbursements from foreign governments, multilateral agencies and other entities
to reduce principal and interest arrearages on their debt. The failure of a
sovereign debtor to implement economic reforms, achieve specified levels of
economic performance or repay principal or interest when due may result in the
cancellation of third-party commitments to lend funds to the sovereign debtor,
which may further impair such debtor's ability or willingness to service its
debts.

                 BRADY BONDS. The Fund may invest in Brady bonds, which are
securities created through the exchange of existing commercial bank loans to
public and private entities in certain emerging markets for new bonds in
connection with debt restructurings. Brady bonds have been issued since 1989 and
do not have a long payment history. In light of the history of defaults of
countries issuing Brady bonds on their commercial bank loans, investments in
Brady bonds may be viewed as speculative. Brady bonds may be fully or partially
collateralized or uncollateralized, are issued in various currencies (but
primarily the dollar) and are actively traded in over-the-counter secondary
markets. Incomplete collateralization of interest or principal payment
obligations results in increased credit risk. Dollar-denominated collateralized
Brady bonds, which may be fixed-rate bonds or floating-rate bonds, are generally
collateralized by U.S. Treasury zero coupon bonds having the same maturity as
the Brady bonds.

                 OBLIGATIONS OF SUPRANATIONAL ENTITIES. The Fund may invest in
obligations of supranational entities designated or supported by governmental
entities to promote economic reconstruction or development and of international
banking institutions and related government agencies. Examples include the
International Bank for Reconstruction and Development (the "World Bank"), the
European Coal and Steel Community, the Asian Development Bank and the
Inter-American Development Bank. Each supranational entity's lending activities
are limited to a percentage of its total capital (including "callable capital"
contributed by its governmental members at the entity's call), reserves and net
income. There is no assurance that participating governments will be able or
willing to honor their commitments to make capital contributions to a
supranational entity.

                 FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Because the Fund may
buy and sell securities and receive interest in currencies other than the U.S.
dollar, the Fund may enter into foreign currency exchange transactions from time
to time. The Fund either enters into these transactions on a spot (i.e. cash)
basis at the spot rate prevailing in the foreign currency exchange market or
uses forward contracts to purchase or sell foreign currencies. The cost of the
Fund's spot currency exchange transactions is generally the difference between
the bid and offer spot rate of the currency being purchased or sold.

                 A forward foreign currency exchange contract is an obligation
by the Fund to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract. Forward foreign
currency exchange contracts establish an exchange rate at a future date. These
contracts are derivative instruments, as their value derives from the spot
exchange rates of the currencies underlying the contract. These contracts are
entered into in the interbank market directly between currency traders (usually
large commercial banks) and their customers. A forward foreign currency exchange
contract generally has no deposit requirement and is traded at a net price
without commission. Neither spot transactions nor forward foreign currency
exchange contracts eliminate fluctuations in the prices of the Fund's securities
or in foreign exchange rates, or prevent loss if the prices of these securities
should decline.

                 The Fund may enter into foreign currency exchange transactions
in an attempt to protect against changes in foreign currency exchange rates
between the trade and settlement dates of specific securities transactions or
anticipated securities transactions. The Fund also may enter into forward
contracts to hedge against a change in foreign currency exchange rates that
would cause a decline in the value of existing investments denominated or
principally traded in a foreign currency. To do this, the Fund would enter into
a forward contract to sell the foreign currency in which the investment is
denominated or principally traded in exchange for U.S. dollars or in exchange
for another foreign currency. The Fund will enter into forward contract to sell
a foreign currency for another foreign currency only if the Advisor expects the
foreign currency purchased to appreciate against the U.S. dollar.

                 Although these transactions are intended to minimize the risk
of loss due to a decline in the value of the hedged currency, at the same time
they limit any potential gain that might be realized should the value of the
hedged currency increase. In addition, forward contracts that convert a foreign
currency into another foreign currency will cause the Fund to assume the risk of
fluctuations in the value of the currency purchased against the hedged currency
and the U.S. dollar. The precise matching of the forward contract amounts and
the value of the securities involved will not generally be possible because the
future value of such securities in foreign currencies will change as a
consequence of market movements in the value of such securities between the date
the forward contract is entered into and the date it matures. The projection of
currency market movements is extremely difficult, and the successful execution
of a hedging strategy is highly uncertain.

INVESTING IN EMERGING MARKETS

                 The Fund also may invest in countries with emerging economies
or securities markets. Political and economic structures in many of such
countries may be undergoing significant evolution and rapid development, and
such countries may lack the social, political and economic stability
characteristic of more developed countries. Certain of such countries may have
in the past failed to recognize private property rights and have at times
nationalized or expropriated the assets of private companies. As a result, the
risks described above, including the risks of nationalization or expropriation
of assets, may be heightened. In addition, unanticipated political or social
developments may affect the values of the Fund's investments in those countries
and the availability to the Fund of additional investments in those countries.
The small size and inexperience of the securities markets in certain of such
countries and the limited volume of trading in securities in those countries may
make the Fund's investments in such countries illiquid and more volatile than
investments in more developed countries, and the Fund may be required to
establish special custodial or other arrangements before making certain
investments in those countries. There may be little financial or accounting
information available with respect to issuers located in certain of such
countries, and it may be difficult as a result to assess the value or prospects
of an investment in such issuers.

                 Transaction costs in emerging markets may be higher than in the
United States and other developed securities markets. As legal systems in
emerging markets develop, foreign investors may be adversely affected by new or
amended laws and regulations or may not be able to obtain swift and equitable
enforcement of existing law.

ADDITIONAL INVESTMENTS

                 CONVERTIBLE SECURITIES. The Fund may invest in convertible
securities of domestic and foreign issuers. The convertible securities in which
the Fund may invest include any debt securities or preferred stock which may be
converted into common stock or which carry the right to purchase common stock.
Convertible securities entitle the holder to exchange the securities for a
specified number of shares of common stock, usually of the same company, at
specified prices within a certain period of time.

                 WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Fund may
purchase securities on a when-issued or delayed delivery basis. For example,
delivery of and payment for these securities can take place a month or more
after the date of the purchase commitment. The purchase price and the interest
rate payable, if any, on the securities are fixed on the purchase commitment
date or at the time the settlement date is fixed. The value of such securities
is subject to market fluctuation and no interest will accrue to the Fund until
settlement takes place. At the time the Fund makes the commitment to purchase
securities on a when-issued or delayed delivery basis, it will record the
transaction and reflect the value each day of such securities in determining its
net asset value. At the time of settlement, a when-issued security may be valued
at less than the purchase price. To facilitate such acquisitions, the Fund will
maintain with the custodian a segregated account with liquid assets, consisting
of cash or other liquid assets, in an amount at least equal to such commitments.
If the Fund chooses to dispose of the right to acquire a when-issued security
prior to its acquisition, it could (as with the disposition of any other fund
obligation) incur a gain or loss due to market fluctuation. Also, the Fund may
be disadvantaged if the other party to the transaction defaults.

                 INVESTMENT COMPANY SECURITIES. Securities of other investment
companies may be acquired by the Fund to the extent permitted under the
Investment Company Act of 1940, as amended (the "1940 Act"). These limits
require that, as determined immediately after a purchase is made, (i) not more
than 5% of the value of the Fund's total assets will be invested in the
securities of any one investment company, (ii) not more than 10% of the value of
the Fund's total assets will be invested in the aggregate in securities of
investment companies as a group, and (iii) not more than 3% of the outstanding
voting stock of any one investment company will be owned by the Fund. As a
shareholder of another investment company, the Fund would bear, along with other
shareholders, its pro rata portion of the other investment company's expenses,
including advisory fees. These expenses would be in addition to the advisory and
other expenses that the Fund bears directly in connection with its own
operations.

                 REVERSE REPURCHASE AGREEMENTS. The Fund may enter into reverse
repurchase agreements. In a reverse repurchase agreement, the Fund sells a
security and agrees to repurchase the same security at a mutually agreed upon
date and price, reflecting the interest rate effective for the term of the
agreement. For purposes of the 1940 Act, a reverse repurchase agreement may be
deemed to be a borrowing of money by the Fund and, therefore, a form of
leverage. Leverage may cause any gains or losses for the Fund to be magnified.
The Fund will invest the proceeds of borrowings under reverse repurchase
agreements. In addition, the Fund will enter into a reverse repurchase agreement
only when the expected return to be earned from the investment of the proceeds
is greater than the interest expense of the transaction. The Fund may not enter
into reverse repurchase agreements exceeding in the aggregate one-third of the
market value of its total assets less liabilities (other than reverse repurchase
agreements and other borrowings). See "Investment Restrictions."

                 MORTGAGE DOLLAR ROLL TRANSACTIONS. The Fund may engage in
mortgage dollar roll transactions with respect to mortgage securities issued by
the Government National Mortgage Association, the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation. In a mortgage dollar
roll transaction, the Fund sells a mortgage backed security and simultaneously
agrees to repurchase a similar security on a specified future date at an agreed
upon price. During the roll period, the Fund will not be entitled to receive any
interest or principal paid on the securities sold. The Fund is compensated for
the lost interest on the securities sold by the difference between the sales
price and the lower price for the future repurchase as well as by the interest
earned on the reinvestment of the sales proceeds. The Fund may also be
compensated by receipt of a commitment fee. When the Fund enters into a mortgage
dollar roll transaction, liquid assets in an amount sufficient to pay for the
future repurchase are segregated with the custodian. Mortgage dollar roll
transactions are considered reverse repurchase agreements for purposes of the
Fund's investment restrictions.

                 LOANS OF PORTFOLIO SECURITIES. The Fund is permitted to lend
its securities in an amount up to 33-1/3% of the value of the Fund's net assets.
The Fund may lend its securities if such loans are secured continuously by cash
or equivalent collateral or by a letter of credit in favor of the Fund at least
equal at all times to 100% of the market value of the securities loaned, plus
accrued interest. While such securities are on loan, the borrower will pay the
Fund any income accruing thereon. Loans will be subject to termination by the
Fund in the normal settlement time, (generally three business days after notice)
or by the borrower on one day's notice. Borrowed securities must be returned
when the loan is terminated. Any gain or loss in the market price of the
borrowed securities that occurs during the term of the loan inures to the Fund
and its respective shareholders. The Fund may pay reasonable finders' and
custodial fees in connection with a loan. In addition, the Fund will consider
all facts and circumstances before entering into such an agreement, including
the creditworthiness of the borrowing financial institution, and the Fund will
not make any loans in excess of one year. The Fund will not lend its securities
to any officer, Trustee, Director, employee or other affiliate of the Fund, the
Advisor or the Fund's distributor, unless otherwise permitted by applicable law.

                 ILLIQUID INVESTMENTS; PRIVATELY PLACED AND OTHER UNREGISTERED
SECURITIES. The Fund may not acquire any illiquid securities if, as a result
thereof, more than 15% of its net assets would be in illiquid investments.
Subject to this non-fundamental policy limitation, the Fund may acquire
investments that are illiquid or have limited liquidity, such as private
placements or investments that are not registered under the Securities Act of
1933, as amended (the "1933 Act"), and cannot be offered for public sale in the
United States without first being registered under the 1933 Act. An illiquid
investment is any investment that cannot be disposed of within seven days in the
normal course of business at approximately the amount at which it is valued by
the Fund. The price the Fund pays for illiquid securities or receives upon
resale may be lower than the price paid or received for similar securities with
a more liquid market. Accordingly, the valuation of these securities will
reflect any limitations on their liquidity.

                 As to illiquid investments, these restricted holdings are
subject to the risk that the Fund will not be able to sell them at a price the
Fund deems representative of their value. If a restricted holding must be
registered under the 1933 Act, before it may be sold, the Fund may be obligated
to pay all or part of the registration expenses. Also, a considerable period may
elapse between the time of the decision to sell and the time the Fund is
permitted to sell a holding under an effective registration statement. If during
such a period adverse market conditions were to develop, the Fund might obtain a
less favorable price than prevailed when it decided to sell.

MONEY MARKET INSTRUMENTS

                 Although the Fund intends, under normal circumstances and to
the extent practicable, to be fully invested in municipal obligations and
taxable fixed income securities, the Fund may invest in money market instruments
to the extent consistent with its investment objective and policies. The Fund
may invest in money market instruments to invest temporary cash balances, to
maintain liquidity to meet redemptions or as a defensive measure during, or in
anticipation of, adverse market conditions. A description of the various types
of money market instruments that may be purchased by the Fund appears below. See
"Quality and Diversification Requirements."

                 U.S. TREASURY SECURITIES. The Fund may invest in direct
obligations of the U.S. Treasury, including Treasury bills, notes and bonds, all
of which are backed as to principal and interest payments by the full faith and
credit of the United States.

                 ADDITIONAL U.S. GOVERNMENT OBLIGATIONS. The Fund may invest in
obligations issued or guaranteed by U.S. Government agencies or
instrumentalities. These obligations may or may not be backed by the "full faith
and credit" of the United States. Securities which are backed by the full faith
and credit of the United States include obligations of the Government National
Mortgage Association, the Farmers Home Administration and the Export-Import
Bank. In the case of securities not backed by the full faith and credit of the
United States, the Fund must look principally to the federal agency issuing or
guaranteeing the obligation for ultimate repayment and may not be able to assert
a claim against the United States itself in the event the agency or
instrumentality does not meet its commitments. Securities in which the Fund may
invest that are not backed by the full faith and credit of the United States
include, but are not limited to: (i) obligations of the Tennessee Valley
Authority, the Federal Home Loan Mortgage Corporation, the Federal Home Loan
Banks and the U.S. Postal Service, each of which has the right to borrow from
the U.S. Treasury to meet its obligations; (ii) securities issued by the Federal
National Mortgage Association, which are supported by the discretionary
authority of the U.S. Government to purchase the agency's obligations; and (iii)
obligations of the Federal Farm Credit System and the Student Loan Marketing
Association, each of whose obligations may be satisfied only by the individual
credit of the issuing agency.

                 BANK OBLIGATIONS. Unless otherwise noted below, the Fund may
invest in negotiable certificates of deposit, time deposits and bankers'
acceptances of (i) banks, savings and loan associations and savings banks which
have more than $2 billion in total assets and are organized under the laws of
the United States or any state, (ii) foreign branches of these banks or of
foreign banks of equivalent size (Euros) and (iii) U.S. branches of foreign
banks of equivalent size (Yankees). The Fund will not invest in obligations for
which the Advisor, or any of its affiliated persons, is the ultimate obligor or
accepting bank. The Fund may also invest in obligations of international banking
institutions designated or supported by national governments to promote economic
reconstruction, development or trade between nations (e.g., the European
Investment Bank, the Inter-American Development Bank, or the World Bank).

                 COMMERCIAL PAPER. The Fund may invest in commercial paper,
including master demand obligations. Master demand obligations are obligations
that provide for a periodic adjustment in the interest rate paid and permit
daily changes in the amount borrowed. Master demand obligations are governed by
agreements between the issuer and Morgan Guaranty Trust Company of New York
("Morgan"), an affiliate acting as agent, for no additional fee. The monies
loaned to the borrower come from accounts managed by Morgan or its affiliates,
pursuant to arrangements with such accounts. Interest and principal payments are
credited to such accounts. Morgan, an affiliate of the Advisor, has the right to
increase or decrease the amount provided to the borrower under an obligation.
The borrower has the right to pay without penalty all or any part of the
principal amount then outstanding on an obligation together with interest to the
date of payment. Since these obligations typically provide that the interest
rate is tied to the Federal Reserve commercial paper composite rate, the rate on
master demand obligations is subject to change. Repayment of a master demand
obligation to participating accounts depends on the ability of the borrower to
pay the accrued interest and principal of the obligation on demand, which is
continuously monitored by Morgan. Since master demand obligations typically are
not rated by credit rating agencies, the Fund may invest in such unrated
obligations only if, at the time of investment, the obligation is determined by
the Advisor to have a credit quality which satisfies the Fund's quality
restrictions. See "Quality and Diversification Requirements." Although there is
no secondary market for master demand obligations, such obligations are
considered by the Fund to be liquid because they are payable upon demand. The
Fund does not have any specific percentage limitation on investments in master
demand obligations. It is possible that the issuer of a master demand obligation
could be a client of Morgan to whom Morgan, an affiliate of the Advisor, in its
capacity as a commercial bank, has made a loan.

                 REPURCHASE AGREEMENTS. The Fund may enter into repurchase
agreements with brokers, dealers or banks that meet the credit guidelines
approved by the Trust's Trustees. In a repurchase agreement, the Fund buys a
security from a seller that has agreed to repurchase the same security at a
mutually agreed upon date and price. The resale price normally is in excess of
the purchase price, reflecting an agreed upon interest rate. This interest rate
is effective for the period of time the agreement is in effect and is not
related to the coupon rate on the underlying security. A repurchase agreement
may also be viewed as a fully collateralized loan of money by the Fund to the
seller. The period of these repurchase agreements will usually be short, from
overnight to one week, and at no time will the Fund invest in repurchase
agreements for more than thirteen months. The securities which are subject to
repurchase agreements, however, may have maturity dates in excess of thirteen
months from the effective date of the repurchase agreement. The Fund will always
receive securities as collateral whose market value is, and during the entire
term of the agreement remains, at least equal to 100% of the dollar amount
invested by the Fund in each agreement plus accrued interest, and the Fund will
make payment for such securities only upon physical delivery or upon evidence of
book entry transfer to the account of the custodian. If the seller defaults, the
Fund might incur a loss if the value of the collateral securing the repurchase
agreement declines and might incur disposition costs in connection with
liquidating the collateral. In addition, if bankruptcy proceedings are commenced
with respect to the seller of the security, realization upon disposal of the
collateral by the Fund may be delayed or limited.

QUALITY AND DIVERSIFICATION REQUIREMENTS

                 The Fund intends to meet the diversification requirements of
the 1940 Act. Current 1940 Act diversification requirements require that with
respect to 75% of the assets of the Fund: (1) the Fund may not invest more than
5% of its total assets in the securities of any one issuer, except obligations
of the U.S. Government, its agencies and instrumentalities, and (2) the Fund may
not own more than 10% of the outstanding voting securities of any one issuer. As
for the other 25% of the Fund's assets not subject to the limitation described
above, there is no limitation on investment of these assets under the 1940 Act,
so that all of such assets may be invested in securities of any one issuer.
Investments not subject to the limitations described above could involve an
increased risk to the Fund should an issuer, or a state or its related entities,
be unable to make interest or principal payments or should the market value of
such securities decline.

                 The Fund also will comply with the diversification requirements
imposed by the Internal Revenue Code of 1986, as amended (the "Code"), for
qualification as a regulated investment company. See "Taxes."

                 The Fund invests in a diversified portfolio of securities that
are considered "high grade," " investment grade" and "below investment grade" as
described in Appendix A. In addition, at the time the Fund invests in any
commercial paper, bank obligation or repurchase agreement, the issuer must have
outstanding debt rated A or higher by Moody's Investors Service, Inc.
("Moody's") or Standard & Poor's Ratings Group ("S&P"), the issuer's parent
corporation, if any, must have outstanding commercial paper rated Prime-1 by
Moody's or A-1 by S&P, or if no such ratings are available, the investment must
be of comparable quality in the Advisor's opinion. At the time the Fund invests
in any other short-term debt securities, they must be rated A or higher by
Moody's or S&P, or if unrated, the investment must be of comparable quality in
the Advisor's opinion.

                 In determining suitability of investment in a particular
unrated security, the Advisor takes into consideration asset and debt service
coverage, the purpose of the financing, history of the issuer, existence of
other rated securities of the issuer, and other relevant conditions, such as
comparability to other issuers.

                 BELOW INVESTMENT GRADE DEBT. Certain lower rated securities
purchased by the Fund, such as those rated Ba or B by Moody's or BB or B by
Standard & Poor's (commonly known as junk bonds), may be subject to certain
risks with respect to the issuing entity's ability to make scheduled payments of
principal and interest and to greater market fluctuations. While generally
providing greater income than investments in higher quality securities, lower
quality fixed income securities involve greater risk of loss of principal and
income, including the possibility of default or bankruptcy of the issuers of
such securities, and have greater price volatility, especially during periods of
economic uncertainty or change. These lower quality fixed income securities tend
to be affected by economic changes and short-term corporate and industry
developments to a greater extent than higher quality securities, which react
primarily to fluctuations in the general level of interest rates. To the extent
that the Fund invests in such lower quality securities, the achievement of its
investment objective may be more dependent on the Advisor's own credit analysis.

                 Lower quality fixed income securities are affected by the
market's perception of their credit quality, especially during times of adverse
publicity, and the outlook for economic growth. Economic downturns or an
increase in interest rates may cause a higher incidence of default by the
issuers of these securities, especially issuers that are highly leveraged. The
market for these lower quality fixed income securities is generally less liquid
than the market for investment grade fixed income securities. It may be more
difficult to sell these lower rated securities to meet redemption requests, to
respond to changes in the market, or to value accurately the Fund's portfolio
securities for purposes of determining the Fund's net asset value. See Appendix
A for more detailed information on these ratings.


 OPTIONS AND FUTURES TRANSACTIONS

                 The Fund may use futures contracts and options for hedging and
risk management purposes. See "Risk Management" below. The Fund may not use
futures contracts and options for speculation.

                 The Fund may use options and futures contracts to manage its
exposure to changing security prices. Some options and futures strategies,
including selling futures contracts and buying puts, tend to hedge the Fund's
investments against price fluctuations. Other strategies, including buying
futures contracts, writing puts and calls, and buying calls, tend to increase
market exposure. Options and futures contracts may be combined with each other
or with forward contracts in order to adjust the risk and return characteristics
of the Fund's overall strategy in a manner deemed appropriate to the Advisor and
consistent with the Fund's objective and policies. Because combined options
positions involve multiple trades, they result in higher transaction costs and
may be more difficult to open and close out.

                 The use of options and futures is a highly specialized activity
which involves investment strategies and risks different from those associated
with ordinary portfolio securities transactions, and there can be no guarantee
that their use will increase the Fund's return. While the use of these
instruments by the Fund may reduce certain risks associated with owning its
portfolio securities, these techniques themselves entail certain other risks. If
the Advisor applies a strategy at an inappropriate time or judges market
conditions or trends incorrectly, options and futures strategies may lower the
Fund's return. Certain strategies limit the Fund's possibilities to realize
gains as well as limiting its exposure to losses. The Fund could also experience
losses if the prices of its options and futures positions were poorly correlated
with its other investments, or if it could not close out its positions because
of an illiquid secondary market. In addition, the Fund will incur transaction
costs, including trading commissions and option premiums, in connection with its
futures and options transactions and these transactions could significantly
increase the Fund's turnover rate.

                 The Fund may purchase put and call options on securities,
indexes of securities and futures contracts, or purchase and sell futures
contracts, only if such options are written by other persons and if (i) the
aggregate premiums paid on all such options which are held at any time do not
exceed 20% of the Fund's net assets, and (ii) the aggregate margin deposits
required on all such futures or options thereon held at any time do not exceed
5% of the Fund's total assets.

OPTIONS

                 PURCHASING PUT AND CALL OPTIONS. By purchasing a put option,
the Fund obtains the right (but not the obligation) to sell the instrument
underlying the option at a fixed strike price. In return for this right, the
Fund pays the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indexes of securities, indexes of securities prices, and futures
contracts. The Fund may terminate its position in a put option it has purchased
by allowing it to expire or by exercising the option. The Fund also may close
out a put option position by entering into an offsetting transaction, if a
liquid market exists. If the option is allowed to expire, the Fund will lose the
entire premium it paid. If the Fund exercises a put option on a security, it
will sell the instrument underlying the option at the strike price. If the Fund
exercises an option on an index, settlement is in cash and does not involve the
actual sale of securities. If an option is American style, it may be exercised
on any day up to its expiration date. A European style option may be exercised
on its expiration date.

                 The buyer of a typical put option can expect to realize a gain
if the price of the underlying instrument falls substantially. However, if the
price of the instrument underlying the option does not fall enough to offset the
cost of purchasing the option, a put buyer can expect to suffer a loss (limited
to the amount of the premium paid, plus related transaction costs).

                 The features of call options are essentially the same as those
of put options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the instrument underlying the option at the option's
strike price. A call buyer typically attempts to participate in potential price
increases of the instrument underlying the option with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can expect to
suffer a loss if security prices do not rise sufficiently to offset the cost of
the option.

                 SELLING (WRITING) PUT AND CALL OPTIONS. When the Fund writes a
put option, it takes the opposite side of the transaction from the option's
purchaser. In return for receipt of the premium, the Fund assumes the obligation
to pay the strike price for the instrument underlying the option if the other
party to the option chooses to exercise it. The Fund may seek to terminate its
position in a put option it writes before exercise by purchasing an offsetting
option in the market at its current price. If the market is not liquid for a put
option the Fund has written, however, the Fund must continue to be prepared to
pay the strike price while the option is outstanding, regardless of price
changes, and must continue to post margin as discussed below.

                 If the price of the underlying instrument rises, a put writer
would generally expect to profit, although its gain would be limited to the
amount of the premium it received. If security prices remain the same over time,
it is likely that the writer also will profit, because it should be able to
close out the option at a lower price. If security prices fall, the put writer
would expect to suffer a loss. This loss should be less than the loss from
purchasing and holding the underlying instrument directly, however, because the
premium received for writing the option should offset a portion of the decline.

                 Writing a call option obligates the Fund to sell or deliver the
option's underlying instrument in return for the strike price upon exercise of
the option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer offsets part of the effect of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is greater,
a call writer gives up some ability to participate in security price increases.

                 The writer of an exchange traded put or call option on a
security, an index of securities or a futures contract is required to deposit
cash or securities or a letter of credit as margin and to make mark to market
payments of variation margin as the position becomes unprofitable.

                 OPTIONS ON INDEXES. Options on securities indexes are similar
to options on securities, except that the exercise of securities index options
is settled by cash payment and does not involve the actual purchase or sale of
securities. In addition, these options are designed to reflect price
fluctuations in a group of securities or segment of the securities market rather
than price fluctuations in a single security. The Fund, in purchasing or selling
index options, is subject to the risk that the value of its portfolio securities
may not change as much as an index because the Fund's investments generally will
not match the composition of an index.

                 For a number of reasons, a liquid market may not exist and thus
the Fund may not be able to close out an option position into which it has
previously entered. When the Fund purchases an OTC option (as defined below), it
will be relying on its counterparty to perform its obligations, and the Fund may
incur additional losses if the counterparty is unable to perform.

                 EXCHANGE TRADED AND OTC OPTIONS. All options purchased or sold
by the Funds will be traded on a securities exchange or will be purchased or
sold by securities dealers ("OTC options") that meet creditworthiness standards
approved by the Board of Trustees. While exchange traded options are obligations
of the Options Clearing Corporation, in the case of OTC options, the Fund relies
on the dealer from which it purchased the option to perform if the option is
exercised. Thus, when the Fund purchases an OTC option, it relies on the dealer
from which it purchased the option to make or take delivery of the underlying
securities. Failure by the dealer to do so would result in the loss of the
premium paid by the Fund as well as the loss of the expected benefit of the
transaction.

                 Provided that the Fund has arrangements with certain qualified
dealers who agree that the Fund may repurchase any option it writes for a
maximum price to be calculated by a predetermined formula, the Fund may treat
the underlying securities used to cover written OTC options as liquid. In these
cases, the OTC option itself would only be considered illiquid to the extent
that the maximum repurchase price under the formula exceeds the intrinsic value
of the option.

                 FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. The Fund
may purchase or sell (write) futures contracts and purchase or sell put and call
options, including put and call options on futures contracts. In addition, the
Fund may sell (write) put and call options, including options on futures.
Futures contracts obligate the buyer to take and the seller to make delivery at
a future date of a specified quantity of a financial instrument or an amount of
cash based on the value of a securities index. Currently, futures contracts are
available on various types of fixed income securities, including, but not
limited to, U.S. Treasury bonds, notes and bills, Eurodollar certificates of
deposit and on indexes of fixed income securities and indexes of equity
securities.

                 Unlike a futures contract, which requires the parties to buy
and sell a security or make a cash settlement payment based on changes in a
financial instrument or securities index on an agreed date, an option on a
futures contract entitles its holder to decide on or before a future date
whether to enter into such a contract. If the holder decides not to exercise its
option, the holder may close out the option position by entering into an
offsetting transaction or may decide to let the option expire and forfeit the
premium thereon. The purchaser of an option on a futures contract pays a premium
for the option but makes no initial margin payments or daily payments of cash in
the nature of "variation" margin payments to reflect the change in the value of
the underlying contract as does a purchaser or seller of a futures contract.

                 The seller of an option on a futures contract receives the
premium paid by the purchaser and may be required to pay initial margin. Amounts
equal to the initial margin and any additional collateral required on any
options on futures contracts sold by the Fund are paid by the Fund into a
segregated account, in the name of the Futures Commission Merchant, as required
by the 1940 Act and the interpretations of the Securities and Exchange
Commission ("SEC") thereunder.

                 COMBINED POSITIONS. The Fund is permitted to purchase and write
options in combination with other series of the Trust, or in combination with
futures or forward contracts, to adjust the risk and return characteristics of
the overall position. For example, the Fund may purchase a put option and write
a call option on the same underlying instrument, in order to construct a
combined position whose risk and return characteristics are similar to selling a
futures contract. Another possible combined position would involve writing a
call option at one strike price and buying a call option at a lower price, in
order to reduce the risk of the written call option in the event of a
substantial price increase. Because combined options positions involve multiple
trades, they result in higher transaction costs and may be more difficult to
open and close out.

                 CORRELATION OF PRICE CHANGES. Because there are a limited
number of types of exchange traded options and futures contracts, it is likely
that the standardized options and futures contracts available will not match the
Fund's current or anticipated investments exactly. The Fund may invest in
options and futures contracts based on securities with different issuers,
maturities, or other characteristics from the securities in which it typically
invests, which involves a risk that the options or futures position will not
track the performance of the Fund's other investments.

                 Options and futures contracts prices also can diverge from the
prices of their underlying instruments, even if the underlying instruments match
the Fund's investments well. Options and futures contracts prices are affected
by such factors as current and anticipated short term interest rates, changes in
volatility of the underlying instrument, and the time remaining until expiration
of the contract, which may not affect security prices the same way. Imperfect
correlation also may result from differing levels of demand in the options and
futures markets and the securities markets, from structural differences in how
options and futures and securities are traded, or from imposition of daily price
fluctuation limits or trading halts. The Fund may purchase or sell options and
futures contracts with a greater or lesser value than the securities it wishes
to hedge or intends to purchase in order to attempt to compensate for
differences in volatility between the contract and the securities, although this
may not be successful in all cases. If price changes in the Fund's options or
futures positions are poorly correlated with its other investments, the
positions may fail to produce anticipated gains or result in losses that are not
offset by gains in other investments.

                 LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no
assurance a liquid market will exist for any particular option or futures
contract at any particular time even if the contract is traded on an exchange.
In addition, exchanges may establish daily price fluctuation limits for options
and futures contracts and may halt trading if a contract's price moves up or
down more than the limit in a given day. On volatile trading days when the price
fluctuation limit is reached or a trading halt is imposed, it may be impossible
for the Fund to enter into new positions or close out existing positions. If the
market for a contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable positions, and
could potentially require the Fund to continue to hold a position until delivery
or expiration regardless of changes in its value. As a result, the Fund's access
to other assets held to cover its options or futures positions also could be
impaired. See "Exchange Traded and OTC Options" above for a discussion of the
liquidity of options not traded on an exchange.

                 POSITION LIMITS. Futures exchanges can limit the number of
futures and options on futures contracts that can be held or controlled by an
entity. If an adequate exemption cannot be obtained, the Fund or the Advisor may
be required to reduce the size of its futures and options positions or may not
be able to trade a certain futures or options contract in order to avoid
exceeding such limits.

                 ASSET COVERAGE FOR FUTURES CONTRACTS AND OPTIONS POSITIONS.
Although the Fund will not be commodity pools, certain derivatives subject the
Fund to the rules of the Commodity Futures Trading Commission which limit the
extent to which the Fund can invest in such derivatives. The Fund may invest in
futures contracts and options with respect thereto for hedging purposes without
limit. However, the Fund may not invest in such contracts and options for other
purposes if the sum of the amount of initial margin deposits and premiums paid
for unexpired options with respect to such contracts, other than for bona fide
hedging purposes, exceeds 5% of the liquidation value of the Fund's assets,
after taking into account unrealized profits and unrealized losses on such
contracts and options; provided, however, that in the case of an option that is
in-the-money at the time of purchase, the in-the-money amount may be excluded in
calculating the 5% limitation.

 SWAPS AND RELATED SWAP PRODUCTS

                 The Fund may engage in swap transactions, including, but not
limited to, interest rate, currency, securities index, basket, specific security
and commodity swaps, interest rate caps, floors and collars and options on
interest rate swaps (collectively defined as "swap transactions").

                 The Fund may enter into swap transactions for any legal purpose
consistent with its investment objective and policies, such as for the purpose
of attempting to obtain or preserve a particular return or spread at a lower
cost than obtaining that return or spread through purchases and/or sales of
instruments in cash markets, to protect against currency fluctuations, as a
duration management technique, to protect against any increase in the price of
securities the Fund anticipates purchasing at a later date, or to gain exposure
to certain matters in the most economical way possible. The Fund will not sell
interest rate caps, floors or collars if it does not own securities with coupons
which provide the interest that the Fund may be required to pay.

                 Swap agreements are two-party contracts entered into primarily
by institutional counterparties for periods ranging from a few weeks to several
years. In a standard swap transaction, two parties agree to exchange the returns
(or differentials in rates of return) that would be earned or realized on
specified notional investments or instruments. The gross returns to be exchanged
or "swapped" between the parties are calculated by reference to a "notional
amount," i.e., the return on or increase in value of a particular dollar amount
invested at a particular interest rate, in a particular foreign currency or
commodity, or in a "basket" of securities representing a particular index. The
purchaser of an interest rate cap or floor, upon payment of a fee, has the right
to receive payments (and the seller of the cap is obligated to make payments) to
the extent a specified interest rate exceeds (in the case of a cap) or is less
than (in the case of a floor) a specified level over a specified period of time
or at specified dates. The purchaser of an interest rate collar, upon payment of
a fee, has the right to receive payments (and the seller of the collar is
obligated to make payments) to the extent that specified interest rate falls
outside an agreed upon range over a specified period of time or at specified
dates. The purchase of an option on an interest rate swap, upon payment of a fee
(either at the time of purchase or in the form of higher payments or lower
receipts within an interest rate swap transaction) has the right, but not the
obligation, to initiate a new swap transaction of a pre-specified notional
amount with pre-specified terms with the seller of the option as the
counterparty.

                 The "notional amount" of a swap transaction is the agreed upon
basis for calculating the payments that the parties have agreed to exchange. For
example, one swap counterparty may agree to pay a floating rate of interest
(e.g., three month LIBOR) calculated based on a $10 million notional amount on a
quarterly basis in exchange for receipt of payments calculated based on the same
notional amount and a fixed rate of interest on a semi-annual basis. In the
event the Fund is obligated to make payments more frequently than it receives
payments from the other party, it will incur incremental credit exposure to that
swap counterparty. This risk may be mitigated somewhat by the use of swap
agreements which call for a net payment to be made by the party with the larger
payment obligation when the obligations of the parties fall due on the same
date. Under most swap agreements entered into by the Fund, payments by the
parties will be exchanged on a "net basis," and the Fund will receive or pay, as
the case may be, only the net amount of the two payments.

                 The amount of the Fund's potential gain or loss on any swap
transaction is not subject to any fixed limit. Nor is there any fixed limit on
the Fund's potential loss if it sells a cap or collar. If the Fund buys a cap,
floor, or collar, however, the Fund's potential loss is limited to the amount of
the fee that it has paid. When measured against the initial amount of cash
required to initiate the transaction, which is typically zero in the case of
most conventional swap transactions, swaps, caps, floors and collars tend to be
more volatile than many other types of instruments.

                 The use of swap transactions, caps, floors and collars involves
investment techniques and risks which are different from those associated with
portfolio security transactions. If the Advisor is incorrect in its forecasts of
market values, interest rates, and other applicable factors, the investment
performance of the Fund will be less favorable than if these techniques had not
been used. These instruments typically are not traded on exchanges. Accordingly,
there is a risk that the other party to certain of these instruments will not
perform its obligations to the Fund or that the Fund may be unable to enter into
offsetting positions to terminate its exposure or liquidate its position under
certain of these instruments when it wishes to do so. Such occurrences could
result in losses to the Fund.

                 The Advisor will, however, consider such risks and will enter
into swap and other derivative transactions only when it believes that the risks
are not unreasonable.

                 The Fund will maintain cash or liquid assets in a segregated
account with its custodian in an amount sufficient at all times to cover its
current obligations under its swap transactions, caps, floors and collars. If
the Fund enters into a swap agreement on a net basis, it will segregate assets
with daily value at least equal to the excess, if any, of the Fund's accrued
obligations under the swap agreement over the accrued amount the Fund is
entitled to receive under the agreement. If the Fund enters into a swap
agreement on other than a net basis, or sells a cap, floor or collar, it will
segregate assets with a daily value at least equal to the full amount of a
Fund's accrued obligations under the agreement.

                 The Fund will not enter into any swap transaction, cap, floor,
or collar, unless the counterparty to the transaction is deemed creditworthy by
the Advisor. If a counterparty defaults, the Fund may have contractual remedies
pursuant to the agreements related to the transaction. The swap markets in which
many types of swap transactions are traded have grown substantially in recent
years, with a large number of banks and investment banking firms acting both as
principals and as agents using standardized swap documentation. As a result, the
markets for certain types of swaps (e.g., interest rate swaps) have become
relatively liquid. The markets for some types of caps, floors and collars are
less liquid.

                 The liquidity of swap transactions, caps, floors and collars
will be as set forth in guidelines established by the Advisor and approved by
the Trustees which are based on various factors, including (1) the availability
of dealer quotations and the estimated transaction volume for the instrument,
(2) the number of dealers and end users for the instrument in the marketplace,
(3) the level of market making by dealers in the type of instrument, (4) the
nature of the instrument (including any right of a party to terminate it on
demand) and (5) the nature of the marketplace for trades (including the ability
to assign or offset the Fund's rights and obligations relating to the
instrument). Such determination will govern whether the instrument will be
deemed within the 15% restriction on investments in securities that are not
readily marketable.

                 During the term of a swap, cap, floor or collar, changes in the
value of the instrument are recognized as unrealized gains or losses by marking
to market to reflect the market value of the instrument. When the instrument is
terminated, the Fund will record a realized gain or loss equal to the
difference, if any, between the proceeds from (or cost of) the closing
transaction and the Fund's basis in the contract.

                 The federal income tax treatment with respect to swap
transactions, caps, floors, and collars may impose limitations on the extent to
which the Fund may engage in such transactions.

SHORT SELLING

                 In these transactions, the Fund sells a security it does not
own in anticipation of a decline in the market value of the security. To
complete the transaction, the Fund must borrow the security to make delivery to
the buyer. The Fund is obligated to replace the security borrowed by purchasing
it subsequently at the market price at the time of replacement. The price at
such time may be more or less than the price at which the security was sold by
the Fund, which may result in a loss or gain, respectively. Unlike purchasing a
stock, where potential losses are limited to the purchase price, short sales
have no cap on maximum losses, and gains are limited to the price of the stock
at the time of the short sale.

RISK MANAGEMENT

                 The Fund may employ non-hedging risk management techniques.
Risk management strategies are used to keep the Fund fully invested and to
reduce the transaction costs associated with cash flows into and out of the
Fund. The objective where equity futures are used to "equitize" cash is to match
the notional value of all futures contracts to the Fund's cash balance. The
notional value of futures and of the cash is monitored daily. As the cash is
invested in securities and/or paid out to participants in redemptions, the
Advisor simultaneously adjusts the futures positions. Through such procedures,
the Fund not only gains equity exposure from the use of futures, but also
benefits from increased flexibility in responding to client cash flow needs.
Additionally, because it can be less expensive to trade a list of securities as
a package or program trade rather than as a group of individual orders, futures
provide a means through which transaction costs can be reduced. Such non-hedging
risk management techniques are not speculative, but because they involve
leverage include, as do all leveraged transactions, the possibility of losses as
well as gains that are greater than if these techniques involved the purchase
and sale of the securities themselves rather than their synthetic derivatives.


INVESTMENT RESTRICTIONS

                 The investment restrictions set forth below have been adopted
by the Trust with respect to the Fund. Except as otherwise noted, these
investment restrictions are "fundamental" policies which, under the 1940 Act,
may not be changed without the vote of a majority of the outstanding voting
securities of the Fund. A "majority of the outstanding voting securities" is
defined in the 1940 Act as the lesser of (a) 67% or more of the voting
securities present at a meeting if the holders of more than 50% of the
outstanding voting securities are present or represented by proxy, or (b) more
than 50% of the outstanding voting securities. The percentage limitations
contained in the restrictions below apply at the time of purchasing securities
to the market value of the Fund's assets.

                 Unless Sections 8(b)(1) and 13(a) of the 1940 Act or any SEC or
SEC staff interpretations thereof are amended or modified, the Fund:

                 1. May not make any investments inconsistent with the Fund's
classification as a diversified investment company under the 1940 Act;

                 2. May not purchase any security which would cause the Fund to
concentrate its investments in the securities of issuers primarily engaged in
any particular industry, except as permitted by the SEC;

                 3. May not issue senior securities, except as permitted under
the 1940 Act or any rule, order or interpretation thereunder;

                 4. May not borrow money, except to the extent permitted by
applicable law;

                 5. May not underwrite securities of other issuers, except to
the extent that the Fund, in disposing of portfolio securities, may be deemed an
underwriter within the meaning of the 1933 Act;

                 6. May not purchase or sell real estate, except that, to the
extent permitted by applicable law, the Fund may (a) invest in securities or
other instruments directly or indirectly secured by real estate, (b) invest in
securities or other instruments issued by issuers that invest in real estate,
and (c) make direct investments in mortgages;

                 7. May not purchase or sell commodities or commodity contracts
unless acquired as a result of ownership of securities or other instruments
issued by persons that purchase or sell commodities or commodities contracts;
but this shall not prevent the Fund from purchasing, selling and entering into
financial futures contracts (including futures contracts on indices of
securities, interest rates and currencies), options on financial futures
contracts (including futures contracts on indices of securities, interest rates
and currencies), warrants, swaps, forward contracts, foreign currency spot and
forward contracts or other derivative instruments that are not related to
physical commodities; and

                 8. May make loans to other persons, in accordance with their
respective investment objectives and policies and to the extent permitted by
applicable law.

                 NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. The investment
restrictions described below are not fundamental policies of the Fund and may be
changed by the Trustees. These non-fundamental investment policies require that
the Fund:

                 (i) May not acquire any illiquid securities, such as repurchase
agreements with more than seven days to maturity or fixed time deposits with a
duration of over seven calendar days, if as a result thereof, more than 15% of
the market value of the Fund's net assets would be in investments which are
illiquid; and

                 (ii) May not acquire securities of other investment companies,
except as permitted by the 1940 Act or any order pursuant thereto.

                 (iii) May not purchase securities on margin, make short sales
of securities, or maintain a short position, provided that this restriction
shall not be deemed to be applicable to the purchase or sale of when-issued or
delayed delivery securities, or to short sales that are covered in accordance
with SEC rules.

                 If any percentage restriction described above is adhered to at
the time of investment, a subsequent increase or decrease in the percentage
resulting from a change in the value of the Fund's assets will not constitute a
violation of the restriction.

                 For purposes of fundamental investment restrictions regarding
industry concentration, the Advisor may classify issuers by industry in
accordance with classifications set forth in the DIRECTORY OF COMPANIES FILING
ANNUAL REPORTS WITH THE SECURITIES AND EXCHANGE COMMISSION or other sources. In
the absence of such classification or if the Advisor determines in good faith
based on its own information that the economic characteristics affecting a
particular issuer make it more appropriately considered to be engaged in a
different industry, the Advisor may classify an issuer accordingly. For
instance, personal credit finance companies and business credit finance
companies are deemed to be separate industries and wholly owned finance
companies are considered to be in the industry of their parents if their
activities are primarily related to financing the activities of their parents.

TRUSTEES AND OFFICERS

TRUSTEES

                 The Trustees of the Trust, their principal occupations during
the past five years, business addresses and dates of birth are set forth below.

                 FREDERICK S. ADDY-Trustee; Retired; Prior to April 1994,
Executive Vice President and Chief Financial Officer, Amoco Corporation. His
address is 5300 Arbutus Cove, Austin, Texas 78746, and his date of birth is
January 1, 1932.

                 WILLIAM G. BURNS-Trustee; Retired; Former Vice Chairman and
Chief Financial Officer, NYNEX. His address is 2200 Alaqua Drive, Longwood,
Florida 32779, and his date of birth is November 2, 1932.

                 ARTHUR C. ESCHENLAUER-Trustee; Retired; Former Senior Vice
President, Morgan Guaranty Trust Company of New York. His address is 14 Alta
Vista Drive, RD #2, Princeton, New Jersey 08540, and his date of birth is May
23, 1934.

                 MATTHEW HEALEY1 - Trustee, Chairman and Chief Executive
Officer; Chairman, Pierpont Group, Inc., since prior to 1992. His address is
Pine Tree Country Club Estates, 10286 Saint Andrews Road, Boynton Beach, Florida
33436, and his date of birth is August 23, 1937.

                 Each Trustee is currently paid an annual fee of $75,000 for
serving as Trustee of the Trust, each of the Master Portfolios (as defined
below), the J.P. Morgan Institutional Funds and J.P. Morgan Funds and is
reimbursed for expenses incurred in connection with service as a Trustee. The
Trustees may hold various other directorships unrelated to these funds.

                 Trustee compensation expenses paid by the Trust for the
calendar year ended December 31, 1998 is set forth below.

- ---------------------
1         Mr. Healey is an "interested person" (as defined in the 1940 Act) of
          the Trust. Mr. Healey is also an "interested person" (as defined in
          the 1940 Act) of the Advisor due to his son's affiliation with JPMIM.

<PAGE>
<TABLE>
<CAPTION>

                                                                                                        TOTAL TRUSTEE COMPENSATION
                                                                                                          ACCRUED BY THE MASTER
                                                                                                        PORTFOLIOS(*), J.P. MORGAN
                                                        AGGREGATE TRUSTEE                                INSTITUTIONAL FUNDS, J.P.
                                                   COMPENSATION PAID BY THE                             MORGAN FUNDS AND THE TRUST
NAME OF TRUSTEE AND TITLE                             TRUST DURING 1998                                       DURING 1998(**)
- --------------------------                         -------------------------                          ----------------------------
<S>                                                        <C>                                           <C>
Frederick S. Addy, Trustee                                 $__________                                   $__________

William G. Burns, Trustee                                  $__________                                   $__________

Arthur C. Eschenlauer, Trustee                             $__________                                   $__________

Matthew Healey, Trustee (***)                              $__________                                   $__________
 Chairman and Chief
Executive  Officer

Michael P. Mallardi, Trustee                               $__________                                   $__________

</TABLE>

                 (*) The J.P. Morgan Funds and J.P. Morgan Institutional Funds
are each multi-series registered investment companies that are part of a
two-tier (master-feeder) investment fund structure. Each series of the J.P.
Morgan Funds and J.P. Morgan Institutional Funds is a feeder fund that invests
all of its investable assets in one of 15 registered investment companies
comprised of 22 separate master portfolios (collectively, the "Master
Portfolios").

                 (**) No investment company within the fund complex has a
pension or retirement plan.

                 (***) During 1998, Pierpont Group, Inc. paid Mr. Healey, in his
role as Chairman of Pierpont Group, Inc., compensation in the amount of
$__________, contributed $__________ to a defined contribution plan on his
behalf and paid $__________ in insurance premiums for his benefit.

                 The Trustees decide upon general policies and are responsible
for overseeing the Trust's business affairs. The Trust has entered into a Fund
Services Agreement with Pierpont Group, Inc. to assist the Trustees in
exercising their overall supervisory responsibilities over the affairs of the
Trust. Pierpont Group, Inc. was organized in July 1989 to provide services for
the J.P. Morgan Family of Funds (formerly, The Pierpont Family of Funds), and
the Trustees are the equal and sole shareholders of Pierpont Group, Inc. The
Trust has agreed to pay Pierpont Group, Inc. a fee in an amount representing its
reasonable costs in performing these services to the Trust and certain other
registered investment companies subject to similar agreements with Pierpont
Group, Inc. These costs are periodically reviewed by the Trustees. The principal
offices of Pierpont Group, Inc. are located at 461 Fifth Avenue, New York, New
York 10017.


OFFICERS

                 The Trust's executive officers (listed below), other than the
Chief Executive Officer and the officers who are employees of the Advisor, are
provided and compensated by Funds Distributor, Inc. ("FDI"), a wholly owned
indirect subsidiary of Boston Institutional Group, Inc. The Chief Executive
Officer receives no compensation in his capacity as an officer of the Trust. The
officers conduct and supervise the business operations of the Trust. The Trust
has no employees.

                 The officers of the Trust, their principal occupations during
the past five years and dates of birth are set forth below. The business address
of each of the officers unless otherwise noted is Funds Distributor, Inc., 60
State Street, Suite 1300, Boston, Massachusetts 02109.

                 MATTHEW HEALEY-Chief Executive Officer; Chairman, Pierpont
Group, since prior to 1993. His address is Pine Tree Country Club Estates, 10286
Saint Andrews Road, Boynton Beach, Florida 33436. His date of birth is August
23, 1937.

                 MARGARET W. CHAMBERS-Vice President and Secretary. Senior Vice
President and General Counsel of FDI since April, 1998. From August 1996 to
March 1998, Ms. Chambers was Vice President and Assistant General Counsel for
Loomis, Sayles & Company, L.P. From January 1986 to July 1996, she was an
associate with the law firm of Ropes & Gray. Her date of birth is October 12,
1959.

                 MARIE E. CONNOLLY-Vice President and Assistant Treasurer.
President, Chief Executive Officer, Chief Compliance Officer and Director of
FDI, Premier Mutual Fund Services, Inc., an affiliate of FDI ("Premier Mutual"),
and an officer of certain investment companies distributed or administered by
FDI. Prior to July 1994, she was President and Chief Compliance Officer of FDI.
Her date of birth is August 1, 1957.

                 DOUGLAS C. CONROY-Vice President and Assistant Treasurer.
Assistant Vice President and Assistant Department Manager of Treasury Services
and Administration of FDI and an officer of certain investment companies
distributed or administered by FDI. Prior to April 1997, Mr. Conroy was
Supervisor of Treasury Services and Administration of FDI. From April 1993 to
January 1995, Mr. Conroy was a Senior Fund Accountant for Investors Bank & Trust
Company. His date of birth is March 31, 1969.

                 KAREN JACOPPO WOOD-Vice President and Assistant Secretary. Vice
President and Senior Counsel of FDI and an officer of certain investment
companies distributed or administered by FDI. From June 1994 to January 1996,
Ms. Jacoppo-Wood was a Manager of SEC Registration at Scudder, Stevens & Clark,
Inc. Prior to May 1994, Ms. Jacoppo-Wood was a senior paralegal at The Boston
Company Advisors, Inc. ("TBCA"). Her date of birth is December 29, 1966.

                 CHRISTOPHER J. KELLEY-Vice President and Assistant Secretary.
Vice President and Senior Associate General Counsel of FDI and Premier Mutual
and an officer of certain investment companies distributed or administered by
FDI. From April 1994 to July 1996, Mr. Kelley was Assistant Counsel at Forum
Financial Group. Prior to April 1994, Mr. Kelley was employed by Putnam
Investments in legal and compliance capacities. His date of birth is December
24, 1964.

                 KATHLEEN K. MORRISEY-Vice President and Assistant Secretary.
Vice President and Assistant Secretary of FDI. Manager of Treasury Services
Administration and an officer of certain investment companies advised or
administered by Montgomery Asset Management, L.P. and Dresdner RCM Global
Investors, Inc., and their respective affiliates. From July 1994 to November
1995, Ms. Morrisey was a Fund Accountant for Investors Bank & Trust Company.
Prior to July 1994 she was a finance student at Stonehill College. Her date of
birth is July 5, 1972.

                 MARY A. NELSON-Vice President and Assistant Treasurer. Vice
President and Manager of Treasury Services and Administration of FDI and Premier
Mutual and an officer of certain investment companies distributed or
administered by FDI. Prior to August 1994, Ms. Nelson was an Assistant Vice
President and Client Manager for The Boston Company, Inc. Her date of birth is
April 22, 1964.

                 MARY JO PACE-Assistant Treasurer. Vice President, Morgan
Guaranty Trust Company of New York. Ms. Pace serves in the Funds Administration
group as a Manager for the Budgeting and Expense Processing Group. Prior to
September 1995, Ms. Pace served as a Fund Administrator for Morgan Guaranty
Trust Company of New York. Her address is 60 Wall Street, New York, New York
10260. Her date of birth is March 13, 1966.

                 MICHAEL S. PETRUCELLI-Vice President and Assistant Secretary.
Senior Vice President and Director of Strategic Client Initiatives for FDI since
December 1996. From December 1989 through November 1996, Mr. Petrucelli was
employed with GE Investments where he held various financial, business
development and compliance positions. He also served as Treasurer of the GE
Funds and as Director of GE Investment Services. His address is 200 Park Avenue,
New York, New York, 10166. His date of birth is May 18, 1961.

                 STEPHANIE D. PIERCE-Vice President and Assistant Secretary.
Vice President and Client Development Manager for FDI since April 1998. From
April 1997 to March 1998, Ms. Pierce was employed by Citibank, NA as an officer
of Citibank and Relationship Manager on the Business and Professional Banking
team handling over 22,000 clients. From August 1995 to April 1997, she was an
Assistant Vice President with Hudson Valley Bank, and from September 1990 to
August 1995, she was a Second Vice President with Chase Manhattan Bank. Her
address is 200 Park Avenue, New York, New York 10166. Her date of birth is
August 18, 1968.

                 GEORGE A. RIO-President and Assistant Treasurer. Executive Vice
President and Client Service Director of FDI since April 1998. From June 1995 to
March 1998, Mr. Rio was Senior Vice President and Senior Key Account Manager for
Putnam Mutual Funds. From May 1994 to June 1995, Mr. Rio was Director of
Business Development for First Data Corporation. From September 1983 to May
1994, Mr. Rio was Senior Vice President & Manager of Client Services and
Director of Internal Audit at The Boston Company. His date of birth is January
2, 1955.

                 CHRISTINE ROTUNDO-Assistant Treasurer. Vice President, Morgan
Guaranty Trust Company of New York. Ms. Rotundo serves in the Funds
Administration group as a Manager of the Tax Group and is responsible for U.S.
mutual fund tax matters. Prior to September 1995, Ms. Rotundo served as a Senior
Tax Manager in the Investment Company Services Group of Deloitte & Touche LLP.
Her address is 60 Wall Street, New York, New York 10260. Her date of birth is
September 26, 1965.


INVESTMENT ADVISOR

                 The Trust has retained JPMIM as Investment Advisor to provide
investment advice and portfolio management services to the Fund. Subject to the
supervision of the Fund's Trustees, the Advisor makes the Fund's day-to-day
investment decisions, arranges for the execution of portfolio transactions and
generally manages the Fund's investments.

                 JPMIM, a wholly owned subsidiary of J.P. Morgan & Co.
Incorporated ("J.P. Morgan"), is a registered investment adviser under the
Investment Advisers Act of 1940, as amended, and manages employee benefit funds
of corporations, labor unions and state and local governments and the accounts
of other institutional investors, including investment companies. Certain of the
assets of employee benefit accounts under its management are invested in
commingled pension trust funds for which Morgan serves as trustee.

                 J.P. Morgan, through the Advisor and other subsidiaries, acts
as investment advisor to individuals, governments, corporations, employee
benefit plans, mutual funds and other institutional investors with combined
assets under management of more than $275 billion.

                 J.P. Morgan has a long history of service as an advisor,
underwriter and lender to an extensive roster of major companies and as a
financial advisor to national governments. The firm, through its predecessor
firms, has been in business for over a century and has been managing investments
since 1913.

                 The basis of the Advisor's investment process is fundamental
investment research because the firm believes that fundamentals should determine
an asset's value over the long term. The Advisor currently employs over 100
full-time research analysts, among the largest research staffs in the money
management industry, in its investment management divisions located in New York,
London, Tokyo, Frankfurt and Singapore to cover companies, industries and
countries on site. In addition, the investment management divisions employ
approximately 300 capital market researchers, portfolio managers and traders.
The conclusions of the equity analysts' fundamental research are quantified into
a set of projected returns for individual companies through the use of a
dividend discount model. These returns are projected for two to five years to
enable analysts to take a longer term view. These returns, or normalized
earnings, are used to establish relative values among stocks in each industrial
sector. These values may not be the same as the markets' current valuations of
these companies. This provides the basis for ranking the attractiveness of the
companies in an industry according to five distinct quintiles or rankings. This
ranking is one of the factors considered in determining the stocks purchased and
sold in each sector.

                 The investment advisory services the Advisor provides to the
Fund are not exclusive under the terms of the Investment Advisory Agreement. The
Advisor is free to and does render similar investment advisory services to
others. The Advisor serves as investment advisor to personal investors and other
investment companies and acts as fiduciary for trusts, estates and employee
benefit plans. Certain of the assets of trusts and estates under management are
invested in common trust funds for which the Advisor serves as trustee. The
accounts which are managed or advised by the Advisor have varying investment
objectives and the Advisor invests assets of such accounts in investments
substantially similar to, or the same as, those which are expected to constitute
the principal investments of the Fund. Such accounts are supervised by officers
and employees of the Advisor who may also be acting in similar capacities for
the Fund. See "Portfolio Transactions."

                 Sector weightings are generally similar to a benchmark with the
emphasis on security selection as the method to achieve investment performance
superior to the benchmark. The benchmark for the Fund is _____________________.

                 Morgan, also a wholly owned subsidiary of J.P. Morgan, is a
bank holding company organized under the laws of the State of Delaware. Morgan,
whose principal offices are at 60 Wall Street, New York, New York 10260, is a
New York trust company which conducts a general banking and trust business.
Morgan is subject to regulation by the New York State Banking Department and is
a member bank of the Federal Reserve System. Through offices in New York City
and abroad, Morgan offers a wide range of services, primarily to governmental,
institutional, corporate and high net worth individual customers in the United
States and throughout the world.

                 The Fund is managed by officers of the Advisor who, in acting
for their clients, including the Fund, do not discuss their investment decisions
with any personnel of J.P. Morgan or any personnel of other divisions of J.P.
Morgan or with any of its affiliated persons, with the exception of certain
investment management affiliates of J.P. Morgan.

                 As compensation for the services rendered and related expenses
such as salaries of advisory personnel borne by the Advisor under the Advisory
Agreements, the Fund has agreed to pay the Advisor a fee, which is computed
daily and may be paid monthly, equal to 0.15% of the Fund's average daily net
assets.

                 The Investment Advisory Agreement between the Advisor and the
Trust, on behalf of the Fund, provides that it will continue in effect for a
period of two years after execution only if specifically approved thereafter
annually in the same manner as the Distribution Agreement. See "Distributor"
below. The Investment Advisory Agreement will terminate automatically if
assigned and is terminable at any time with respect to the Fund without penalty
by a vote of a majority of the Trust's Trustees or by a vote of the holders of a
majority of the Fund's outstanding voting securities on 60 days' written notice
to the Advisor and by the Advisor on 90 days' written notice to the Fund. See
"Additional Information."

                 The Glass-Steagall Act and other applicable laws generally
prohibit banks and their subsidiaries, such as the Advisor, from engaging in the
business of underwriting or distributing securities. The Board of Governors of
the Federal Reserve System has issued an interpretation to the effect that under
these laws a bank holding company registered under the federal Bank Holding
Company Act or certain subsidiaries thereof may not sponsor, organize, or
control a registered open-end investment company that continuously issues
shares, such as the Trust. The interpretation does not prohibit a holding
company or a subsidiary thereof from acting as investment advisor,
administrator, shareholder servicing agent or custodian to such an investment
company. The Advisor believes that it may perform the services for the Fund
contemplated by the Investment Advisory Agreement without violation of the
Glass-Steagall Act or other applicable banking laws or regulations. State laws
on this issue may differ from the interpretation of relevant federal law, and
banks and financial institutions may be required to register as dealers pursuant
to state securities laws. However, it is possible that future changes in either
federal or state statutes and regulations concerning the permissible activities
of banks or trust companies, as well as further judicial or administrative
decisions and interpretations of present and future statutes and regulations,
might prevent the Advisor from continuing to perform such services for the Fund.

                 If the Advisor were prohibited from acting as investment
advisor to the Fund, it is expected that the Trustees of the Trust would
recommend to shareholders that they approve the Fund's entering into a new
investment advisory agreement with another qualified investment advisor selected
by the Trustees.

                 Under separate agreements, Morgan provides certain financial,
fund accounting, administrative and shareholder services to the Trust. See
"Services Agent" and "Shareholder Servicing" below.


DISTRIBUTOR

                 FDI serves as the Trust's exclusive distributor and holds
itself available to receive purchase orders for the Fund's shares. In that
capacity, FDI has been granted the right, as agent of the Trust, to solicit and
accept orders for the purchase of the Fund's shares in accordance with the terms
of the Distribution Agreement between the Trust and FDI. Under the terms of the
Distribution Agreement between FDI and the Trust, FDI receives no compensation
in its capacity as the Fund's distributor.

                 The Distribution Agreement will continue in effect with respect
to the Fund for a period of two years after execution and will continue
thereafter only if it is approved at least annually (i) by a vote of the holders
of a majority of the Fund's outstanding voting securities or by its Trustees and
(ii) by a vote of a majority of the Trustees of the Trust who are not
"interested persons" (as defined by the 1940 Act) of the parties to the
Distribution Agreement, cast in person at a meeting called for the purpose of
voting on such approval (see "Trustees and Officers"). The Distribution
Agreement will terminate automatically if assigned by either party. The
Distribution Agreement is also terminable with respect to the Fund at any time
without penalty by a vote of a majority of the Trustees of the Trust, a vote of
a majority of the Trustees who are not "interested persons" of the Trust, or by
a vote of (i) 67% or more of the Fund's outstanding voting securities present at
a meeting if the holders of more than 50% of the Fund's outstanding voting
securities are present or represented by proxy, or (ii) more than 50% of the
Fund's outstanding voting securities, whichever is less. FDI is a wholly owned
indirect subsidiary of Boston Institutional Group, Inc. The principal offices of
FDI are located at 60 State Street, Suite 1300, Boston, Massachusetts 02109.


CO-ADMINISTRATOR

                 Under a Co-Administration Agreement with the Trust, FDI also
serves as the Trust's Co-Administrator. The Co-Administration Agreement may be
renewed or amended by the Trustees without a shareholder vote. The
Co-Administration Agreement is terminable at any time without penalty by a vote
of a majority of the Trustees of the Trust on not more than 60 days' written
notice nor less than 30 days' written notice to the other party. The
Co-Administrator may subcontract for the performance of its obligations,
provided, however, that unless the Trust expressly agrees in writing, the
Co-Administrator shall be fully responsible for the acts and omissions of any
subcontractor as it would for its own acts or omissions. See "Services Agent"
below.

                 FDI (i) provides office space, equipment and clerical personnel
for maintaining the organization and books and records of the Fund; (ii)
provides officers for the Trust; (iii) prepares and files documents required for
notification of state securities administrators; (iv) reviews and files
marketing and sales literature; (v) files regulatory documents and mails
communications to Trustees and investors; and (vi) maintains related books and
records.

                  For its services under the Co-Administration Agreement, the
Fund has agreed to pay FDI fees equal to its allocable share of an annual
complex-wide charge of $425,000 plus FDI's out-of-pocket expenses. The amount
allocable to the Fund is based on the ratio of the Fund's net assets to the
aggregate net assets of the Trust and certain other registered investment
companies subject to similar arrangements with FDI.


SERVICES AGENT

                 The Trust, on behalf of the Fund, has entered into an
Administrative Services Agreement (the "Services Agreement") with Morgan
pursuant to which Morgan is responsible for certain administrative and related
services provided to the Fund. The Services Agreement may be terminated at any
time, without penalty, by the Trustees or Morgan, in each case on not more than
60 days' nor less than 30 days' written notice to the other party.

                 Under the Services Agreement, Morgan provides certain
administrative and related services to the Fund, including services related to
tax compliance, preparation of financial statements, calculation of performance
data, oversight of service providers and certain regulatory and Board of Trustee
matters.

                 Under the Services Agreement, the Fund has agreed to pay Morgan
fees equal to its allocable share of an annual complex-wide charge. This charge
is calculated daily based on the aggregate net assets of the Fund, the Trust's
other series and the Master Portfolios in accordance with the following annual
schedule: 0.09% of the first $7 billion of their aggregate average daily net
assets, and 0.04% of their aggregate average daily net assets in excess of $7
billion, less the complex-wide fees payable to FDI. The portion of this charge
payable by the Fund is determined by the proportionate share that its net assets
bear to the total net assets of the Trust and the other investment companies
provided administrative services by Morgan.


CUSTODIAN AND TRANSFER AGENT

                 State Street Bank and Trust Company ("State Street"), 225
Franklin Street, Boston, Massachusetts 02110, serves as the Trust's custodian
and fund accounting, transfer and dividend disbursing agent. Pursuant to the
Custodian Contract with the Trust, State Street is responsible for maintaining
the books and records of the Fund's portfolio transactions and for holding
portfolio securities and cash. The custodian maintains portfolio transaction
records. As transfer agent and dividend disbursing agent, State Street is
responsible for maintaining account records detailing the ownership of Fund
shares and for crediting income, capital gains and other changes in share
ownership to shareholder accounts.


SHAREHOLDER SERVICING

                 The Trust, on behalf of the Fund, has entered into a
Shareholder Servicing Agreement with Morgan pursuant to which Morgan acts as
shareholder servicing agent for Fund shareholders. Under this agreement, Morgan
is responsible for performing, directly or through an agent, shareholder account
administrative and servicing functions, which include but are not limited to
answering inquiries regarding account status and history, the manner in which
purchases and redemptions of Fund shares may be effected, and certain other
matters pertaining to the Fund; assisting customers in designating and changing
dividend options, account designations and addresses; providing necessary
personnel and facilities to coordinate the establishment and maintenance of
shareholder accounts and records with the Fund's transfer agent; transmitting
purchase and redemption orders to the Fund's transfer agent and arranging for
the wiring or other transfer of funds to and from customer accounts in
connection with orders to purchase or redeem Fund shares; verifying purchase and
redemption orders, transfers among and changes in accounts; informing FDI of the
gross amount of purchase orders for Fund shares; and providing other related
services.

                 Under the Shareholder Servicing Agreement, the Fund has agreed
to pay Morgan for these services a fee of 0.10% with respect to Institutional
Shares and 0.25% with respect to Select Shares (in each case, expressed as a
percentage of the average daily net asset value of the relevant class of Fund
shares owned by or for shareholders for whom Morgan is acting as shareholder
servicing agent). Morgan acts as Shareholder Servicing Agent for all
shareholders.

                 As discussed under "Investment Advisor," the Glass-Steagall Act
and other applicable laws and regulations limit the activities of bank holding
companies and certain of their subsidiaries in connection with registered
open-end investment companies. The activities of Morgan in acting as shareholder
servicing agent for Fund shareholders under the Shareholder Servicing Agreement
and for providing administrative services to the Fund under the Services
Agreement, and JPMIM in acting as Advisor to the Fund under the Investment
Advisory Agreement may raise issues under these laws. However, Morgan and JPMIM
believe that they may properly perform these services and the other activities
described in the Prospectuses without violating the Glass-Steagall Act or other
applicable banking laws or regulations.

                 If Morgan were prohibited from providing any of the services
under the Shareholder Servicing and the Services Agreements, the Trustees would
seek an alternative provider of such services. In such event, changes in the
operation of the Fund might occur and a shareholder might no longer be able to
avail himself or herself of any services then being provided to shareholders by
Morgan.

                 The Fund may be sold to or through financial intermediaries who
are customers of J.P. Morgan ("financial professionals"), including financial
institutions and broker-dealers, that may be paid fees by J.P. Morgan or its
affiliates for services provided to their clients that invest in the Fund. See
"Financial Professionals" below. Organizations that provide recordkeeping or
other services to certain employee benefit or retirement plans that includes the
Fund as an investment alternative may also be paid a fee.


 FINANCIAL PROFESSIONALS

                 The services provided by financial professionals may include
establishing and maintaining shareholder accounts, processing purchase and
redemption transactions, arranging for bank wires, performing shareholder
subaccounting, answering client inquiries regarding the Trust, assisting clients
in changing dividend options, account designations and addresses, providing
periodic statements showing the client's account balance and integrating these
statements with those of other transactions and balances in the client's other
accounts serviced by the financial professional, transmitting proxy statements,
periodic reports, updated prospectuses and other communications to shareholders
and, with respect to meetings of shareholders, collecting, tabulating and
forwarding executed proxies and obtaining such other information and performing
such other services as J.P. Morgan or the financial professional's clients may
reasonably request and agree upon with the financial professional.

                 Although there is no sales charge levied directly by the Fund,
financial professionals may establish their own terms and conditions for
providing their services and may charge investors a transaction-based or other
fee for their services. Such charges may vary among financial professionals but
in all cases will be retained by the financial professional and not be remitted
to the Fund or J.P. Morgan.

                 The Fund has authorized one or more brokers to accept purchase
and redemption orders on its behalf. Such brokers are authorized to designate
other intermediaries to accept purchase and redemption orders on the Fund's
behalf. The Fund will be deemed to have received a purchase or redemption order
when an authorized broker or, it applicable, a broker's authorized designee,
accepts the order. These orders will be priced at the Fund's net asset value
next calculated after they are so accepted.


INDEPENDENT ACCOUNTANTS

                 The independent accountants of the Trust are ________________.
_______________________conducts an annual audit of the financial statements of
the Fund, assists in the preparation and/or review of the Fund's federal and
state income tax returns and consults with the Fund as to matters of accounting
and federal and state income taxation.


EXPENSES

                 In addition to the fees payable to Pierpont Group, Inc., JPMIM,
Morgan and FDI under various agreements discussed under "Trustees and Officers,"
"Investment Advisor," "Co-Administrator", "Distributor", "Services Agent" and
"Shareholder Servicing" above, the Fund is responsible for usual and customary
expenses associated with the Trust's operations. Such expenses include
organization expenses, legal fees, accounting and audit expenses, insurance
costs, the compensation and expenses of the Trustees, registration fees under
federal securities laws, extraordinary expenses, transfer, registrar and
dividend disbursing costs, the expenses of printing and mailing reports, notices
and proxy statements to Fund shareholders, fees under state securities laws,
custodian fees and brokerage expenses.


PURCHASE OF SHARES

                 ADDITIONAL MINIMUM BALANCE INFORMATION. If your account balance
falls below the minimum for 30 days as a result of selling shares (and not
because of performance), the Fund reserves the right to request that you buy
more shares or close your account. If your account balance is still below the
minimum 60 days after notification, the Fund reserves the right to close out
your account and send the proceeds to the address of record.

                 METHOD OF PURCHASE. Investors may open accounts with the Fund
only through the Distributor. All purchase transactions in Fund accounts are
processed by Morgan as shareholder servicing agent and the Fund is authorized to
accept any instructions relating to a Fund account from Morgan as shareholder
servicing agent for the customer. All purchase orders must be accepted by the
Distributor. Prospective investors who are not already customers of Morgan may
apply to become customers of Morgan for the sole purpose of Fund transactions.
There are no charges associated with becoming a Morgan customer for this
purpose. Morgan reserves the right to determine the customers that it will
accept, and the Fund reserves the right to determine the purchase orders that
they will accept.

                 References in the Prospectus and this Statement of Additional
Information to customers of J.P. Morgan or a financial professional include
customers of their affiliates, and references to transactions by customers with
J.P. Morgan or a financial professional include transactions with their
affiliates. Only Fund investors who are using the services of a financial
institution acting as shareholder servicing agent pursuant to an agreement with
the Trust on behalf of the Fund may make transactions in shares of the Fund.

                 The Fund may, at its own option, accept securities in payment
for shares. The securities so delivered are valued by the method described under
"Net Asset Value" as of the day the Fund receives the securities. This is a
taxable transaction to the shareholder. Securities may be accepted in payment
for shares only if they are, in the judgment of the Advisor, appropriate
investments for the Fund. In addition, securities accepted in payment for shares
must: (i) meet the investment objective and policies of the Fund; (ii) be
acquired by the Fund for investment and not for resale; (iii) be liquid
securities which are not restricted as to transfer; and (iv) if stock, have a
value which is readily ascertainable as evidenced by a listing on a stock
exchange, OTC market or by readily available market quotations from a dealer in
such securities. The Fund reserves the right to accept or reject at its own
option any and all securities offered in payment for its shares.

                 Prospective investors may purchase shares with the assistance
of a financial professional and the financial professional may charge the
investor a fee for this service and other services it provides to its customers.
J.P. Morgan may pay fees to financial professionals for services in connection
with fund investments. See "Financial Professionals" above.


REDEMPTION OF SHARES

                 Investors may redeem shares of the Fund as described in the
Prospectus. The Fund generally intends to pay redemption proceeds in cash;
however, it reserves the right at its sole discretion to pay redemptions over
$250,000 in-kind as a portfolio of representative stocks rather than cash. See
below and "Exchange of Shares."

                 The Trust, on behalf of the Fund, reserves the right to suspend
the right of redemption and to postpone the date of payment upon redemption as
follows: (i) for up to seven days, (ii) during periods when the New York Stock
Exchange is closed for other than weekends and holidays or when trading thereon
is restricted as determined by the SEC by rule or regulation, (iii) during
periods in which an emergency, as determined by the SEC, exists that causes
disposal by the Fund of, or evaluation of the net asset value of, its portfolio
securities to be unreasonable or impracticable, or (iv) for such other periods
as the SEC may permit.

                 If the Trust determines that it would be detrimental to the
best interests of the remaining shareholders of the Fund to make payment wholly
or partly in cash, payment of the redemption price may be made in whole or in
part by a distribution in kind of securities from the Fund, in lieu of cash. If
shares are redeemed in-kind, the redeeming shareholder might incur costs in
converting the assets into cash. The Trust is in the process of seeking
exemptive relief from the SEC with respect to redemptions in-kind by the Fund.
If the requested relief is granted, the Fund would then be permitted to pay
redemptions to greater than 5% shareholders in securities, rather than in cash,
to the extent permitted by the SEC and applicable law. The method of valuing
portfolio securities is described under "Net Asset Value," and such valuation
will be made as of the same time the redemption price is determined.

                 In general, the Fund will attempt to select securities for
in-kind redemptions that approximate the overall characteristics of the Fund's
portfolio. The Fund will not distribute illiquid securities to satisfy in-kind
redemptions. For purposes of effecting in-kind redemptions, securities will be
valued in the manner regularly used to value the Fund's portfolio securities.
The Fund will not redeem its shares in-kind in a manner that after giving effect
to the redemption would cause it to violate its investment restrictions or
policies. See the Prospectus for information on redemptions in-kind.

                 OTHER REDEMPTION PROCESSING INFORMATION. Redemption requests
may not be processed if the redemption request is not submitted in proper form.
A redemption request is not in proper form unless the Fund has received the
shareholder's certified taxpayer identification number and address. In addition,
if shares were paid for by check and the check has not yet cleared, redemption
proceeds will not be transmitted until the check has cleared, which may take up
to 15 days. The Fund reserves the right to suspend the right of redemption or
postpone the payment of redemption proceeds to the extent permitted by the SEC.
Shareholders may realize taxable gains upon redeeming shares.

                 For information regarding redemption orders placed through a
financial professional, please see "Financial Professionals" above.


EXCHANGE OF SHARES

                 Subject to the limitations below, an investor may exchange
shares from the Fund into any other J.P. Morgan Fund or J.P. Morgan
Institutional Fund without charge. An exchange may be made so long as after the
exchange the investor has shares, in each fund in which he or she remains an
investor, with a value of at least that fund's minimum investment amount.
Shareholders should read the prospectus of the fund into which they are
exchanging and may only exchange between fund accounts that are registered in
the same name, address and taxpayer identification number. Shares are exchanged
on the basis of relative net asset value per share. Exchanges are in effect
redemptions from one fund and purchases of another fund and the usual purchase
and redemption procedures and requirements are applicable to exchanges. See
"Redemption of Shares." Shareholders subject to federal income tax who exchange
shares in one fund for shares in another fund may recognize capital gain or loss
for federal income tax purposes. Shares of a fund to be acquired are purchased
for settlement when the proceeds from redemption become available. In the case
of investors in certain states, state securities laws may restrict the
availability of the exchange privilege. The Trust reserves the right to
discontinue, alter or limit the exchange privilege at any time.


DIVIDENDS AND DISTRIBUTIONS

                 The Fund declares and pays dividends and distributions as
described under "Dividends and Distributions" in the Prospectus.

                 Dividends and capital gains distributions paid by the Fund are
automatically reinvested in additional shares of the Fund unless the shareholder
has elected to have them paid in cash. Dividends and distributions to be paid in
cash are credited to the shareholder's account at Morgan or at his financial
professional or, in the case of certain Morgan customers, are mailed by check in
accordance with the customer's instructions. The Fund reserves the right to
discontinue, alter or limit the automatic reinvestment privilege at any time.

                 If a shareholder has elected to receive dividends and/or
capital gains distributions in cash and the postal or other delivery service is
unable to deliver checks to the shareholder's address of record, such
shareholder's distribution option will automatically be converted to having all
dividend and other distributions reinvested in additional shares. No interest
will accrue on amounts represented by uncashed distribution or redemption
checks.


NET ASSET VALUE

                 The Fund computes its net asset value separately for each class
of shares outstanding once daily as of the close of trading on the New York
Stock Exchange (normally 4:00 p.m. eastern time) on each business day as
described in the Prospectus. The net asset value will not be computed on the day
the following legal holidays are observed: New Year's Day, Martin Luther King
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. On days when U.S. trading markets close
early in observance of these holidays, the Fund will close for purchases and
redemptions at the same time. The Fund also may close for purchases and
redemptions at such other times as may be determined by the Board of Trustees to
the extent permitted by applicable law. The days on which net asset value is
determined are the Fund's business days.

                 Portfolio securities are valued at the last sale price on the
securities exchange or national securities market on which such securities are
primarily traded. Unlisted securities are valued at the last average of the
quoted bid and asked prices in the OTC market. The value of each security for
which readily available market quotations exist is based on a decision as to the
broadest and most representative market for such security. For purposes of
calculating net asset value all assets and liabilities initially expressed in
foreign currencies will be converted into U.S. dollars at the prevailing average
currency exchange rate on the valuation date.

                 Securities or other assets for which market quotations are not
readily available (including certain restricted and illiquid securities) are
valued at fair value in accordance with procedures established by and under the
general supervision and responsibility of the Trustees. Such procedures include
the use of independent pricing services, which use prices based upon yields or
prices of securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Short-term
investments which mature in 60 days or less are valued at amortized cost if
their original maturity was 60 days or less, or by amortizing their value on the
61st day prior to maturity, if their original maturity when acquired by the Fund
was more than 60 days, unless this is determined not to represent fair value by
the Trustees.

                 Trading in securities in most foreign markets is normally
completed before the close of trading in U.S. markets and may also take place on
days on which the U.S. markets are closed. If events materially affecting the
value of securities occur between the time when the market in which they are
traded closes and the time when the Fund's net asset value is calculated, such
securities will be valued at fair value in accordance with procedures
established by and under the general supervision of the Trustees.


PERFORMANCE DATA

                 From time to time, the Fund may quote performance in terms of
actual distributions, total return or capital appreciation for the various Fund
classes in reports, sales literature and advertisements published by the Trust.
Current performance information may be obtained by calling Morgan at (800)
766-7722.

                 The classes of shares of the Fund may bear different
shareholder servicing fees and other expenses, which may cause the performance
of a class to differ from the performance of another class. Performance
quotations will be computed separately for each class of the Fund's shares. Any
fees charged by an institution directly to its customers' accounts in connection
with investments in the Funds will not be included in calculations of yield and
total return.

                 YIELD QUOTATIONS. As required by regulations of the SEC, the
annualized yield for each class of shares of the Fund is computed by dividing
the Fund's net investment income per share attributable to the class earned
during a 30-day period by the net asset value of the class on the last day of
the period. The average daily number of shares of the class outstanding during
the period that are eligible to receive dividends is used in determining the net
investment income per share. Income is computed by totaling the interest earned
on all debt obligations during the period and subtracting from that amount the
total of all recurring expenses incurred during the period. The 30-day yield is
then annualized on a bond-equivalent basis assuming semi-annual reinvestment and
compounding of net investment income.

                 TOTAL RETURN QUOTATIONS. As required by regulations of the SEC,
average annual total return of each class of shares of the Fund for a period is
computed by assuming a hypothetical initial payment of $10,000. It is then
assumed that all of the dividends and distributions by the Fund over the period
are reinvested. It is then assumed that at the end of the period, the entire
amount is redeemed. The average annual total return is then calculated by
determining the annual rate required for the initial payment to grow to the
amount which would have been received upon redemption.

                 Aggregate total returns, reflecting the cumulative percentage
change over a measuring period, also may be calculated.

                 GENERAL. Performance will vary from time to time depending upon
market conditions, the composition of the portfolio and operating expenses.
Consequently, any given performance quotation should not be considered
representative of the Fund's performance for any specified period in the future.
In addition, because performance will fluctuate, it may not provide a basis for
comparing an investment in the Fund with certain bank deposits or other
investments that pay a fixed yield or return for a stated period of time.

                 Comparative performance information may be used from time to
time in advertising the Fund's shares, including appropriate market indices
including the benchmarks indicated under "Investment Advisor" above or data from
Lipper Analytical Services, Inc., Micropal, Inc., Ibbotson Associates,
Morningstar Inc., the Dow Jones Industrial Average and other industry
publications.

                 From time to time, the Fund may, in addition to any other
permissible information, include the following types of information in
advertisements, supplemental sales literature and reports to shareholders: (1)
discussions of general economic or financial principles (such as the effects of
compounding and the benefits of dollar-cost averaging); (2) discussions of
general economic trends; (3) presentations of statistical data to supplement
such discussions; (4) descriptions of past or anticipated portfolio holdings for
the Fund; (5) descriptions of investment strategies for the Fund; (6)
descriptions or comparisons of various savings and investment products
(including, but not limited to, qualified retirement plans and individual stocks
and bonds), which may or may not include the Fund; (7) comparisons of investment
products (including the Fund) with relevant markets or industry indices or other
appropriate benchmarks; (8) discussions of Fund rankings or ratings by
recognized rating organizations; and (9) discussions of various statistical
methods quantifying the Fund's volatility relative to its benchmark or to past
performance, including risk adjusted measures. The Fund may also include
calculations, such as hypothetical compounding examples, which describe
hypothetical investment results in such communications. Such performance
examples will be based on an express set of assumptions and are not indicative
of the performance of the Fund.


PORTFOLIO TRANSACTIONS

                 The Advisor places orders for the Fund for all purchases and
sales of portfolio securities, enters into repurchase agreements and may enter
into reverse repurchase agreements and execute loans of portfolio securities on
behalf of the Fund. See "Investment Objectives and Policies."

                 Fixed income and debt securities are generally traded at a net
price with dealers acting as principal for their own accounts without a stated
commission. The price of the security usually includes profit to the dealers. In
underwritten offerings, securities are purchased at a fixed price which includes
an amount of compensation to the underwriter, generally referred to as the
underwriter's concession or discount. On occasion, certain securities may be
purchased directly from an issuer, in which case no commissions or discounts are
paid. The Advisor intends to seek best execution on a competitive basis for both
purchases and sales of securities.

                 In selecting a broker, the Advisor considers a number of
factors including: the price per unit of the security; the broker's reliability
for prompt, accurate confirmations and on-time delivery of securities; the
broker's financial condition; and the commissions charged. A broker may be paid
a brokerage commission in excess of that which another broker might have charged
for effecting the same transaction if, after considering the foregoing factors,
the Advisor decides that the broker chosen will provide the best execution. The
Advisor monitors the reasonableness of the brokerage commissions paid in light
of the execution received. The Trust's Trustees review regularly the
reasonableness of commissions and other transaction costs incurred by the Fund
in light of facts and circumstances deemed relevant from time to time and, in
that connection, will receive reports from Morgan and published data concerning
transaction costs incurred by institutional investors generally.

                 Research services provided by brokers to which the Advisor has
allocated brokerage business in the past include economic statistics and
forecasting services, industry and company analyses, portfolio strategy
services, quantitative data and consulting services from economists and
political analysts. Research services furnished by brokers are used for the
benefit of all of the Advisor's clients and not solely or necessarily for the
benefit of the Fund. The Advisor believes that the value of research services
received is not determinable and does not significantly reduce its expenses. The
Fund does not reduce its fee to the Advisor by any amount that might be
attributable to the value of such services.

                 Subject to the overriding objective of obtaining the best
execution of orders, the Advisor may allocate a portion of the Fund's brokerage
transactions to affiliates of the Advisor. In order for affiliates of the
Advisor to effect any portfolio transactions for the Fund, the commissions, fees
or other remuneration received by such affiliates must be reasonable and fair
compared to the commissions, fees, or other remuneration paid to other brokers
in connection with comparable transactions involving similar securities being
purchased or sold on a securities exchange during a comparable period of time.
Furthermore, the Trust's Trustees, including a majority of the Trustees who are
not "interested persons," have adopted procedures which are reasonably designed
to provide that any commissions, fees, or other remuneration paid to such
affiliates are consistent with the foregoing standard.

                 Portfolio securities will not be purchased from or through or
sold to or through the Advisor or FDI or any "affiliated person" (as defined in
the 1940 Act) thereof when such entities are acting as principals, except to the
extent permitted by law. In addition, the Fund will not purchase securities from
any underwriting group of which the Advisor or an affiliate of the Advisor is a
member, except to the extent permitted by law.

                 Investment decisions made by the Advisor are the product of
many factors in addition to basic suitability for the Fund or other client in
question. Thus, a particular security may be bought or sold for certain clients
even though it could have been bought or sold for other clients at the same
time. Likewise, a particular security may be bought for one or more clients when
one or more other clients are selling the same security. The Fund only may sell
a security to another series of the Trust or to other accounts managed by the
Advisor or its affiliates in accordance with procedures adopted by the Trustees.

                 It also sometimes happens that two or more clients
simultaneously purchase or sell the same security. On those occasions when the
Advisor deems the purchase or sale of a security to be in the best interests of
the Fund, as well as other clients including other clients, the Advisor to the
extent permitted by applicable laws and regulations, may, but is not obligated
to, aggregate the securities to be sold or purchased for the Fund with those to
be sold or purchased for other clients in order to obtain best execution,
including lower brokerage commissions if appropriate. In such event, allocation
of the securities so purchased or sold as well as any expenses incurred in the
transaction will be made by the Advisor in the manner it considers to be most
equitable and consistent with the Advisor's fiduciary obligations to the Fund.
In some instances, this procedure might adversely affect the Fund.


MASSACHUSETTS TRUST

                 The Trust is a "Massachusetts business trust" of which the Fund
is a series. A copy of the Declaration of Trust for the Trust is on file in the
office of the Secretary of The Commonwealth of Massachusetts. Under
Massachusetts law, shareholders of such a trust may, under certain 
circumstances, be held personally liable as partners for the obligations of the
trust. However, the Trust's Declaration of Trust provides that the shareholders
will not be subject to any personal liability for the acts or obligations of the
Fund and that every written agreement, obligation, instrument or undertaking
made on behalf of the Fund will contain a provision to the effect that the
shareholders are not personally liable thereunder.

                 The Trust's Declaration of Trust further provides that no
Trustee, officer, employee or agent of the Trust is liable to the Fund or to a
shareholder, and that no Trustee, officer, employee or agent is liable to any
third persons in connection with the affairs of the Fund, except as such
liability may arise from his or its own bad faith, willful misfeasance, gross
negligence or reckless disregard of his or its duties to such third persons
("disabling conduct"). It also provides that all third persons must look solely
to Fund property for satisfaction of claims arising in connection with the
affairs of the Fund. The Trust's Declaration of Trust provides that a Trustee,
officer, employee or agent is entitled to be indemnified against all liability
in connection with the affairs of the Fund, except liabilities arising from
disabling conduct.


DESCRIPTION OF SHARES

                 The Fund represents a separate series of shares of beneficial
interest of the Trust. Fund shares are further divided into separate classes.
See "Massachusetts Trust."

                 The Declaration of Trust permits the Trustees to issue an
unlimited number of full and fractional shares ($0.001 par value) of one or more
series and classes within any series and to divide or combine the shares of any
series without changing the proportionate beneficial interest of each
shareholder in the Fund. To date, the Fund is authorized to issue Institutional
Shares and Select Shares.

                 Each share represents an equal proportional interest in the
Fund with each other share of the same class. Upon liquidation of the Fund,
holders are entitled to share pro rata in the net assets of the Fund available
for distribution to such shareholders. Shares of the Fund have no preemptive or
conversion rights.

                 The shareholders of the Trust are entitled to one full or
fractional vote for each dollar or fraction of a dollar invested in shares.
Subject to the 1940 Act, the Trustees have the power to alter the number and the
terms of office of the Trustees, to lengthen their own terms, or to make their
terms of unlimited duration, subject to certain removal procedures, and to
appoint their own successors. However, immediately after such appointment, the
requisite majority of the Trustees must have been elected by the shareholders of
the Trust. The voting rights of shareholders are not cumulative. The Trust does
not intend to hold annual meetings of shareholders. The Trustees may call
meetings of shareholders for action by shareholder vote if required by either
the 1940 Act or the Trust's Declaration of Trust.

                 Shareholders of the Trust have the right, upon the declaration
in writing or vote of shareholders whose shares represent two-thirds of the net
asset value of the Trust, to remove a Trustee. The Trustees will call a meeting
of shareholders to vote on removal of a Trustee upon the written request of the
shareholders whose shares represent 10% of the net asset value of the Trust. The
Trustees also are required, under certain circumstances, to assist shareholders
in communicating with other shareholders.


TAXES

                 The following discussion of tax consequences is based on U.S.
federal tax laws in effect on the date of the Prospectuses. These laws and
regulations are subject to change by legislative or administrative action.

                 The Fund intends to qualify and remain qualified as a regulated
investment company under Subchapter M of the Code. As a regulated investment
company, the Fund must, among other things, (a) derive at least 90% of its gross
income from dividends, interest, payments with respect to loans of stock and
securities, gains from the sale or other disposition of stock or securities and
other income (including but not limited to gains from options and futures
contracts) derived with respect to its business of investing in such stock or
securities; and (b) diversify its holdings so that, at the end of each fiscal
quarter, (i) at least 50% of the value of the Fund's total assets is represented
by cash, U.S. Government securities, investments in other regulated investment
companies and other securities limited, in respect of any one issuer, to an
amount not greater than 5% of the Fund's total assets, and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its total assets is invested in the securities of any one issuer (other
than U.S. Government securities or the securities of other regulated investment
companies).

                 As a regulated investment company, the Fund (as opposed to its
shareholders) will not be subject to federal income taxes on the net investment
income and capital gains that it distributes to its shareholders, provided that
at least 90% of its net investment income and realized net short-term capital
gains in excess of net long-term capital losses for the taxable year is
distributed in accordance with the Code's requirements. If the Fund does not
qualify as a regulated investment company, it will be treated for tax purposes
as an ordinary corporation subject to federal income tax.

                 Under the Code, the Fund will be subject to a 4% excise tax on
a portion of its undistributed taxable income and capital gains if it fails to
meet certain distribution requirements by the end of the calendar year. The Fund
intends to make distributions in a timely manner and accordingly does not expect
to be subject to the excise tax.

                 For federal income tax purposes, dividends that are declared by
the Fund in October, November or December as of a record date in such month and
actually paid in January of the following year will be treated as if they were
paid on December 31 of the year declared. Therefore, such dividends will
generally be taxable to a shareholder in the year declared rather than the year
paid.

                 Distributions of net investment income and realized net
short-term capital gain in excess of net long-term capital loss is generally
taxable to shareholders of the Fund as ordinary income whether such
distributions are taken in cash or reinvested in additional shares. The Fund
expects that a portion of these distributions to corporate shareholders will be
eligible for the dividends-received deduction, subject to applicable limitations
under the Code. If dividend payments exceed income earned by the Fund, the
overdistribution would be considered a return of capital rather than a dividend
payment. The Fund intends to pay dividends in such a manner so as to minimize
the possibility of a return of capital. Distributions of net long-term capital
gain (i.e., net long-term capital gain in excess of net short-term capital loss)
are taxable to shareholders of the Fund as long-term capital gain, regardless of
whether such distributions are taken in cash or reinvested in additional shares
and regardless of how long a shareholder has held shares in the Fund. In
general, long-term capital gain of an individual shareholder will be subject to
a reduced rate of tax. Investors should consult their tax advisors concerning
the treatment of capital gains and losses.

                 Any distribution of net investment income or capital gains will
have the effect of reducing the net asset value of Fund shares held by a
shareholder by the same amount as the distribution. If the net asset value of
the shares is reduced below a shareholder's cost as a result of such a
distribution, the distribution, although constituting a return of capital to the
shareholder, will be taxable as described above.

                 Any gain or loss realized on the redemption or exchange of Fund
shares by a shareholder who is not a dealer in securities will be treated as
long-term capital gain or loss if the shares have been held for more than one
year, and otherwise as short-term capital gain or loss. However, any loss
realized by a shareholder upon the redemption or exchange of shares in the Fund
held for six months or less will be treated as a long-term capital loss to the
extent of any long-term capital gain distributions received by the shareholder
with respect to such shares. In addition, no loss will be allowed on the
redemption or exchange of shares of the Fund, if within a period beginning 30
days before the date of such redemption or exchange and ending 30 days after
such date, the shareholder acquires (such as through dividend reinvestment)
securities that are substantially identical to shares of the Fund.

                 Ordinarily, gains and losses realized from portfolio
transactions, including short sales, will be treated as capital gains or losses.
However, a portion of any gain or loss realized from the disposition of certain
non-U.S. dollar denominated securities (including debt instruments, certain
forward contracts and option transactions and certain preferred stock) may be
treated as ordinary income or loss under Section 988 of the Code. In addition,
all or a portion of any gain realized from the sale or other disposition of
certain market discount bonds will be treated as ordinary income under Section
1276 of the Code. Finally, all or a portion of any gain realized from engaging
in "conversion transactions" may be treated as ordinary income under Section
1258 of the Code. "Conversion transactions" are defined to include certain
forward, futures, option and straddle transactions, transactions marketed or
sold to produce capital gains, or transactions described in Treasury regulations
to be issued in the future.

                 Under Section 1256 of the Code, any gain or loss the Fund
realizes from certain forward contracts and options transactions will be treated
as 60% long-term capital gain or loss and 40% short-term capital gain or loss.
Gain or loss will arise upon exercise or lapse of such contracts and options as
well as from closing transactions. In addition, any such contracts or options
remaining unexercised at the end of the Fund's taxable year will be treated as
sold for their then fair market value, resulting in additional gain or loss to
the Fund characterized in the manner described above.

                 Offsetting positions held by the Fund involving certain foreign
currency forward contracts and options may constitute "straddles." "Straddles"
are defined to include "offsetting positions" in actively traded personal
property. The tax treatment of "straddles" is governed by Sections 1092 and 1258
of the Code, which, in certain circumstances, override or modify the provisions
of Sections 1256 and 988 of the Code. As such, all or a portion of any short- or
long-term capital gain from certain "straddle" and/or conversion transactions
may be recharacterized as ordinary income.

                 If the Fund were treated as entering into "straddles" by reason
of its engaging in certain forward contracts or options transactions, such
"straddles" would be characterized as "mixed straddles" if the forward contracts
or options transactions comprising a part of such "straddles" were governed by
Section 1256 of the Code. The Fund may make one or more elections with respect
to "mixed straddles." Depending on which election is made, if any, the results
to the Fund may differ. If no election is made, to the extent the "straddle" and
conversion transaction rules apply to positions established by the Fund, losses
realized by the Fund will be deferred to the extent of unrealized gain in the
offsetting position. Moreover, as a result of the "straddle" and conversion
transaction rules, short-term capital losses on "straddle" positions may be
recharacterized as long-term capital losses, and long-term capital gains on
"straddle" positions may be treated as short-term capital gains or ordinary
income.

                 The Taxpayer Relief Act of 1997 included constructive sale
provisions that generally apply if the Fund either (1) holds an appreciated
financial position with respect to stock, certain debt obligations, or
partnership interests ("appreciated financial position") and then enters into a
short sale, futures, forward, or offsetting notional principal contract
(collectively, a "Contract") respecting the same or substantially identical
property or (2) holds an appreciated financial position that is a Contract and
then acquires property that is the same as, or substantially identical to, the
underlying property. In each instance, with certain exceptions, the Fund
generally will be taxed as if the appreciated financial position were sold at
its fair market value on the date the Fund enters into the financial position or
acquires the property, respectively. Transactions that are identified as hedging
or straddle transactions under other provisions of the Code can be subject to
the constructive sale provisions.

                 If the Fund invests in an entity that is classified as a
"passive foreign investment company" ("PFIC") for federal income tax purposes,
the operation of certain provisions of the Code applying to PFICs could result
in the imposition of certain federal income taxes on the Fund. In addition, gain
realized from the sale or other disposition of PFIC securities may be treated as
ordinary income under Section 1291 of the Code and, for tax years beginning
after December 31, 1997, gain realized with respect to PFIC securities that are
marked-to-market will be treated as ordinary income under Section 1296 of the
Code.

                 If a correct and certified taxpayer identification number is
not on file, the Fund is required, subject to certain exemptions, to withhold
31% of certain payments made or distributions declared to non-corporate
shareholders.

                 FOREIGN SHAREHOLDERS. Dividends of net investment income and
distributions of realized net short-term gain in excess of net long-term loss to
a shareholder who, as to the United States, is a nonresident alien individual,
fiduciary of a foreign trust or estate, foreign corporation or foreign
partnership (a "foreign shareholder") will be subject to U.S. withholding tax at
the rate of 30% (or lower treaty rate) unless the dividends are effectively
connected with a U.S. trade or business of the shareholder, in which case the
dividends will be subject to tax on a net income basis at the graduated rates
applicable to U.S. individuals or domestic corporations. Distributions treated
as long term capital gains to foreign shareholders will not be subject to U.S.
tax unless the distributions are effectively connected with the shareholder's
trade or business in the United States or, in the case of a shareholder who is a
nonresident alien individual, the shareholder was present in the United States
for more than 182 days during the taxable year and certain other conditions are
met.

                 In the case of a foreign shareholder who is a nonresident alien
individual or foreign entity, the Fund may be required to withhold U.S. federal
income tax as "backup withholding" at the rate of 31% from distributions treated
as long-term capital gains from the proceeds of redemptions, exchanges or other
dispositions of Fund shares unless IRS Form W-8 is provided. Transfers by gift
of shares of the Fund by a foreign shareholder who is a nonresident alien
individual will not be subject to U.S. federal gift tax, but the value of shares
of the Fund held by such a shareholder at his or her death will be includible in
his or her gross estate for U.S. federal estate tax purposes.

                 STATE AND LOCAL TAXES. The Fund may be subject to state or
local taxes in jurisdictions in which the Fund is deemed to be doing business.
In addition, the treatment of the Fund and its shareholders in those states that
have income tax laws might differ from treatment under the federal income tax
laws. Shareholders should consult their own tax advisors with respect to any
state or local taxes.

                 OTHER TAXATION. The Trust is organized as a Massachusetts
business trust and, under current law, neither the Trust nor the Fund is liable
for any income or franchise tax in The Commonwealth of Massachusetts, provided
that the Fund continues to qualify as a regulated investment company under
Subchapter M of the Code.

ADDITIONAL INFORMATION

                 Telephone calls to the Fund, J.P. Morgan or State Street may be
tape recorded. With respect to the securities offered hereby, this Statement of
Additional Information and the Prospectus do not contain all the information
included in the Trust's registration statement filed with the SEC. Pursuant to
the rules and regulations of the SEC, certain portions have been omitted. The
registration statement, including the exhibits filed therewith, may be examined
at the office of the SEC in Washington, D.C.

                 Statements contained in this Statement of Additional
Information and the Prospectus concerning the contents of any contract or other
document are not necessarily complete, and, in each instance, reference is made
to the copy of such contract or other document filed as an exhibit to the
applicable Registration Statements. Each such statement is qualified in all
respects by such reference.

                 No dealer, salesman or any other person has been authorized to
give any information or to make any representations, other than those contained
in the Prospectus and this Statement of Additional Information, in connection
with the offer contained therein and, if given or made, such other information
or representations must not be relied upon as having been authorized by any of
the Trust, the Funds or FDI. The Prospectus and this Statement of Additional
Information do not constitute an offer by the Fund or by FDI to sell or solicit
any offer to buy any of the securities offered hereby in any jurisdiction to any
person to whom it is unlawful for the Fund or FDI to make such offer in such
jurisdictions.

THE YEAR 2000 INITIATIVE

                 With the new millennium rapidly approaching, organizations are
examining their computer systems to ensure they are year 2000 compliant. The
issue, in simple terms, is that many existing computer systems use only two
numbers to identify a year in the date field with the assumption that the first
two digits are always "19." As the century is implied in the date, on January 1,
2000, computers that are not year 2000 compliant will assume the year is 1900.
Systems that calculate, compare or sort using the incorrect date will cause
erroneous results, ranging from system malfunctions to incorrect or incomplete
transaction processing. If not remedied, potential risks include business
interruption or shutdown, financial loss, reputation loss and/or legal
liability.

                 J.P. Morgan has undertaken a firmwide initiative to address the
year 2000 issue and has developed a comprehensive plan to prepare, as
appropriate, its computer systems. Each business line has taken responsibility
for identifying and fixing the problem within its own area of operation and for
addressing all interdependencies. A multidisciplinary team of internal and
external experts supports the business teams by providing direction and firmwide
coordination. Working together, the business and multidisciplinary teams have
completed a thorough education and awareness initiative and a global inventory
and assessment of J.P. Morgan's technology and application portfolio to
understand the scope of the year 2000 impact at J.P. Morgan. J.P. Morgan
presently is renovating and testing these technologies and applications in
partnership with external consulting and software development organizations, as
well as with year 2000 tool providers. J.P. Morgan is on target with its plan to
substantially complete renovation, testing and validation of its key systems by
year-end 1998 and to participate in industry-wide testing (or streetwide
testing) in 1999. J.P. Morgan is also working with key external parties,
including clients, counterparties, vendors, exchanges, depositories, utilities,
suppliers, agents and regulatory agencies, to stem the potential risks the year
2000 problem poses to J.P. Morgan and to the global financial community.

                 Costs associated with efforts to prepare J.P. Morgan's systems
for the year 2000 approximated $95 million in 1997. In 1998, J.P. Morgan will
continue its efforts to prepare its systems for the year 2000. The total cost to
become year-2000 compliant is estimated at $250 million, for internal systems
renovation and testing, testing equipment and both internal and external
resources working on the project. Remaining costs will be incurred primarily in
1998. The costs associated with J.P. Morgan becoming year-2000 compliant will be
borne by J.P. Morgan and not the Fund.

<PAGE>


APPENDIX A

DESCRIPTION OF SECURITY RATINGS

STANDARD & POOR'S

CORPORATE AND MUNICIPAL BONDS

AAA   -  Debt rated AAA have the highest ratings assigned by Standard & Poor's
         to a debt obligation. Capacity to pay interest and repay principal is
         extremely strong.

AA    -  Debt rated AA have a very strong capacity to pay interest and repay
         principal and differ from the highest rated issues only in a small
         degree.

A     -  Debt rated A have a strong capacity to pay interest and repay
         principal although they are somewhat more susceptible to the adverse
         effects of changes in circumstances and economic conditions than debt
         in higher rated categories.

BBB -    Debt rated BBB are regarded as having an adequate capacity to pay 
         interest and repay  principal.  Whereas they normally exhibit adequate
         protection parameters, adverse economic conditions or changing 
         circumstances are more likely to lead to a weakened capacity to pay 
         interest and repay principal for debt in this category than for debt
         in higher rated categories.

BB  -    Debt rated BB are regarded as having less near-term vulnerability to
         default than other speculative issues. However, they face major ongoing
         uncertainties or exposure to adverse business, financial or economic
         conditions which could lead to inadequate capacity to meet timely
         interest and principal payments.

B   -    An obligation rated B is more vulnerable to nonpayment than obligations
         rated BB, but the obligor currently has the capacity to meet its 
         financial commitment on the obligation.   Adverse business, financial, 
         or economic conditions will likely impair the obligor's capacity or
         willingness to meet its financial commitment on the obligation.

CCC -    An obligation rated CCC is currently vulnerable to nonpayment, and is 
         dependent upon favorable business, financial, and economic conditions 
         for the obligor to meet its financial commitment on the obligation.  
         In the event of adverse business, financial, or economic conditions,
         the obligor is not likely to have the capacity to meet its financial
         commitment on the obligation.

 CC -    An obligation rated CC is currently highly vulnerable to nonpayment.

 C  -    The C rating may be used to cover a situation where a bankruptcy
         petition has been filed or similar action has been taken, but payments
         on this obligation are being continued.

COMMERCIAL PAPER, INCLUDING TAX EXEMPT

A   -    Issues assigned this highest rating are regarded as having the
         greatest capacity for timely payment. Issues in this category are
         further refined with the designations 1, 2, and 3 to indicate the
         relative degree of safety.

A-1 -    This designation indicates that the degree of safety regarding timely
         payment is very strong.

SHORT-TERM TAX-EXEMPT NOTES

SP-1 -   The short-term tax-exempt note rating of SP-1 is the highest rating
         assigned by Standard & Poor's and has a very strong or strong capacity
         to pay principal and interest. Those issues determined to possess
         overwhelming safety characteristics are given a "plus" (+) designation.

SP-2  -  The short-term tax-exempt note rating of SP-2 has a satisfactory
         capacity to pay principal and interest.

MOODY'S

CORPORATE AND MUNICIPAL BONDS

Aaa -    Bonds which are rated Aaa are judged to be of the best quality.  They 
         carry the smallest degree of investment risk and are generally referred
         to as "gilt edge."  Interest payments  are protected by a large or by 
         an exceptionally stable margin and principal is secure.  While the 
         various protective elements are likely to change, such changes as can 
         be visualized are most unlikely to impair the fundamentally strong 
         position of such issues.

Aa -     Bonds which are rated Aa are judged to be of high quality  by all 
         standards.  Together with  the Aaa group they comprise what are 
         generally known as high grade bonds.  They are rated lower than the 
         best bonds because margins of protection may not be as large as in Aaa 
         securities or fluctuation of protective elements may be of greater
         amplitude or there  may be other elements present which make the long 
         term risks appear somewhat larger than in Aaa securities.

A   -    Bonds which are rated A possess many favorable investment attributes
         and are to be considered as upper medium grade obligations. Factors
         giving security to principal and interest are considered adequate but
         elements may be present which suggest a susceptibility to impairment
         sometime in the future.

Baa -    Bonds which are rated Baa are considered as medium grade obligations, 
         i.e., they are neither highly protected  nor poorly secured.  Interest 
         payments and principal security appear adequate for the present but 
         certain protective elements may be lacking or may be characteristically
         unreliable over any great length of time.  Such bonds lack outstanding
         investment characteristics and in fact have speculative characteristics
         as well.

Ba -     Bonds which are rated Ba are judged to have speculative elements; their
         future cannot be considered as well-assured.  Often the protection of 
         interest and principal payments may be very moderate, and thereby not 
         well safeguarded during both good and bad times over the future. 
         Uncertainty of position characterizes bonds in this class.

B  -     Bonds which are rated B generally lack characteristics of the
         desirable investment. Assurance of interest and principal payments or
         of maintenance of other terms of the contract over any long period of
         time may be small.

Caa -    Bonds which are rated Caa are of poor standing. Such issues may be in
         default or there may be present elements of danger with respect to
         principal or interest.

Ca  -    Bonds which are rated Ca represent obligations which are speculative
         in a high degree. Such issues are often in default or have other marked
         shortcomings.

C  -     Bonds which are rated C are the lowest rated class of bonds and
         issues so rated can be regarded as having extremely poor prospects of
         ever attaining any real investment standing.

COMMERCIAL PAPER, INCLUDING TAX EXEMPT

Prime-1  -        Issuers rated Prime-1 (or related supporting institutions)
                  have a superior capacity for repayment of short-term
                  promissory obligations. Prime-1 repayment capacity will
                  normally be evidenced by the following characteristics:

          -       Leading market positions in well established industries.
          -       High rates of return on funds employed.
          -       Conservative capitalization structures with moderate
                  reliance on debt and ample  asset protection.
          -       Broad margins in earnings coverage of fixed financial
                  charges and high internal  cash generation.
          -       Well established access to a range of financial
                  markets and assured sources of  alternate liquidity.

SHORT-TERM TAX EXEMPT NOTES

MIG-1 -           The short-term tax-exempt note rating MIG-1 is the
                  highest rating assigned by  Moody's for notes judged
                  to be the best quality. Notes with this rating enjoy
                  strong protection from established cash flows of funds
                  for their servicing or from  established and
                  broad-based access to the market for refinancing, or
                  both.

MIG-2 -           MIG-2 rated notes are of high quality but with margins
                  of protection not as large  as MIG-1.

<PAGE>

                                     PART C


ITEM 23.  EXHIBITS.

          (a) Declaration of Trust.(1)

          (a)1 Amendment No. 1 to Declaration of Trust, Amended and Restated
Establishment and Designation of Series and Classes of Shares of Beneficial
Interest.(2)

          (a)2 Amendment No. 2 to Declaration of Trust, Second Amended and
Restated Establishment and Designation of Series and Classes of Shares of
Beneficial Interest.(4)

          (a)3 Amendment No. 3 to Declaration of Trust, Third Amended and
Restated Establishment and Designation of Series and Classes of Shares of
Beneficial Interest.(6)

          (a)4 Amendment No. 4 to Declaration of Trust, Fourth Amended and
Restated Establishment and Designation of Series and Classes of Shares of
Beneficial Interest.(8)

          (a)5 Amendment No. 5 to Declaration of Trust, Fifth Amended and
Restated Establishment and Designation of Series and Classes of Shares of
Beneficial Interest.(10)

          (b) Restated By-Laws.(2)

          (d) Amended Investment Advisory Agreement between Registrant and J.P.
Morgan Investment Management Inc. ("JPMIM").(9)

          (e) Form of Distribution Agreement between Registrant and Funds
Distributor, Inc. ("FDI").(2)

          (g) Form of Custodian Contract between Registrant and State Street
Bank and Trust Company ("State Street").(2)

          (h)1 Form of Co-Administration Agreement between Registrant and
FDI.(2)

          (h)2 Form of Administrative Services Agreement between Registrant and
Morgan Guaranty Trust Company of New York ("Morgan").(2)

          (h)3 Form of Transfer Agency and Service Agreement between Registrant
and State Street.(2)

          (h)4 Form of Restated Shareholder Servicing Agreement between
Registrant and Morgan.(9)

          (j) Consent of independent accountants.(11)

          (l) Purchase agreement with respect to Registrant's initial shares.(2)

          20.1 18f-3 Plan for J.P. Morgan California Bond Fund.(3)

          20.2 18f-3 Plan for J.P. Morgan Global 50 Fund. (7)

          27 Financial Data Schedules (not applicable)

      -------------------

          (1)  Incorporated herein from Registrant's registration statement on
               Form N-1A as filed on August 29, 1996 (Accession No.
               0000912057-96-019242).

          (2)  Incorporated herein from Registrant's registration statement on
               Form N-1A as filed on November 8, 1996 (Accession No.
               0001016964-96-000034).

          (3)  Incorporated herein from Registrant's registration statement on
               Form N-1A as filed on February 10, 1997 (Accession No.
               0001016964-97-000014).

          (4)  Incorporated herein from Registrant's registration statement on
               Form N-1A as filed on June 19, 1997 (Accession No.
               0001016964-97-000117).

          (5)  Incorporated herein from Registrant's registration statement on
               Form N-1A as filed on October 21, 1997 (Accession No.
               0001042058-97-000005).

          (6)  Incorporated herein from Registrant's registration statement on
               Form N-1A as filed on January 2, 1998 (Accession
               No.0001041455-98-000012).

          (7)  Incorporated herein from Registrant's registration statement on
               Form N-1A as filed on March 2, 1998 (Accession No.
               0001042058-98-000030).

          (8)  Incorporated herein from Registrant's registration statement on
               Form N-1A as filed on July 28, 1998 (Accession No.
               0001041455-98-000039).

          (9)  Incorporated herein from Registrant's registration statement on
               Form N-1A as filed on August 25, 1998 (Accession No.
               0001041455-98-000054).

          (10) Incorporated herein from Registrant's registration statement on
               Form N-1A as filed on December 30, 1998 (Accession No.
               0001041455-98-000054).
  
          (11) To be filed by amendment.


ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND.

               Not applicable.

ITEM 25. INDEMNIFICATION.

          Reference is made to Section 5.3 of Registrant's Declaration of Trust
and Section 5 of Registrant's Distribution Agreement.

          Registrant, its Trustees and officers are insured against certain
expenses in connection with the defense of claims, demands, actions, suits, or
proceedings, and certain liabilities that might be imposed as a result of such
actions, suits or proceedings.

          Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "1933 Act"), may be permitted to
directors, trustees, officers and controlling persons of the Registrant and the
principal underwriter pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the SEC such indemnification
is against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, trustee, officer, or controlling person of the Registrant
and the principal underwriter in connection with the successful defense of any
action, suite or proceeding) is asserted against the Registrant by such
director, trustee, officer or controlling person or principal underwriter in
connection with the shares being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER.

          JPMIM is a registered investment adviser under the Investment Advisers
Act of 1940, as amended, and is a wholly owned subsidiary of J.P. Morgan & Co.
Incorporated. JPMIM manages employee benefit funds of corporations, labor unions
and state and local governments and the accounts of other institutional
investors, including investment companies.

          To the knowledge of the Registrant, none of the directors, except
those set forth below, or executive officers of JPMIM, is or has been during the
past two fiscal years engaged in any other business, profession, vocation or
employment of a substantial nature, except that certain officers and directors
of JPMIM also hold various positions with, and engage in business for, J.P.
Morgan & Co. Incorporated, which owns all the outstanding stock of JPMIM.

ITEM 27. PRINCIPAL UNDERWRITERS.

          (a) Funds Distributor, Inc. (the "Distributor") is the principal
underwriter of the Registrant's shares.

          Funds Distributor, Inc. acts as principal underwriter for the
following investment companies other than the Registrant:

American Century California Tax-Free and Municipal Funds
American Century Capital Portfolios, Inc.
American Century Government Income Trust
American Century International Bond Funds
American Century Investment Trust
American Century Municipal Trust
American Century Mutual Funds, Inc.
American Century Premium Reserves, Inc.
American Century Quantitative Equity Funds
American Century Strategic Asset Allocations, Inc.
American Century Target Maturities Trust
American Century Variable Portfolios, Inc.
American Century World Mutual Funds, Inc.
BJB Investment Funds
The Brinson Funds
Dresdner RCM Capital Funds, Inc.
Dresdner RCM Equity Funds, Inc.
Founders Funds, Inc.
Harris Insight Funds Trust
HT Insight Funds, Inc. d/b/a Harris Insight Funds
J.P. Morgan Funds
J.P. Morgan Institutional Funds
J.P. Morgan Series Trust II
LaSalle Partners Funds, Inc.
Monetta Fund, Inc.
Monetta Trust
The Montgomery Funds
The Montgomery Funds II
The Munder Framlington Funds Trust
The Munder Funds Trust
The Munder Funds, Inc.
Orbitex Group of Funds
St. Clair Funds, Inc.
The Skyline Funds
Waterhouse Investors Family of Funds, Inc.
WEBS Index Fund, Inc.

          Funds Distributor, Inc. does not act as depositor or investment
adviser to any of the investment companies.

          Funds Distributor, Inc. is registered with the Securities and Exchange
Commission as a broker-dealer and is a member of the National Association of
Securities Dealers. Funds Distributor, Inc. is located at 60 State Street, Suite
1300, Boston, Massachusetts 02109. Funds Distributor, Inc. is an indirect
wholly-owned subsidiary of Boston Institutional Group, Inc., a holding company
all of whose outstanding shares are owned by key employees.

          (b) The following is a list of the executive officers, directors and
partners of Funds Distributor, Inc.:

Director, President and Chief Executive Officer:      Marie E. Connolly
Executive Vice President:                             George Rio
Executive Vice President:                             Donald R. Roberson
Executive Vice President:                             William S. Nichols
Senior Vice President:                                Michael S. Petrucelli
Director, Senior Vice President, Treasurer and
  Chief Financial Officer:                            Joseph F. Tower, III
Senior Vice President:                                Paula R. David
Senior Vice President:                                Allen B. Closser
Senior Vice President:                                Bernard A. Whalen
Director:                                             William J. Nutt

(c) Not applicable

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.

          All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940, as amended (the "1940
Act"), and the Rules thereunder will be maintained at the offices of:

          Morgan Guaranty Trust Company of New York and J.P. Morgan Investment
Management Inc.: 60 Wall Street, New York, New York 10260-0060, 9 West 57th
Street, New York, New York 10019 or 522 Fifth Avenue, New York, New York 10036
(records relating to its functions as investment advisor, shareholder servicing
agent and administrative services agent).

          State Street Bank and Trust Company: 1776 Heritage Drive, North
Quincy, Massachusetts 02171 (records relating to its functions as custodian,
transfer agent and dividend disbursing agent).

          Funds Distributor, Inc.: 60 State Street, Suite 1300, Boston,
Massachusetts 02109 (records relating to its functions as distributor and
co-administrator).

          Pierpont Group, Inc.: 461 Fifth Avenue, New York, New York 10017
(records relating to its assisting the Trustees in carrying out their duties in
supervising the Registrant's affairs).

ITEM 29. MANAGEMENT SERVICES.

               Not applicable.

ITEM 30. UNDERTAKINGS.

          (a)  If the information called for by Item 5A of Form N-1A is
               contained in the latest annual report to shareholders, the
               Registrant shall furnish each person to whom a prospectus is
               delivered with a copy of the Registrant's latest annual report to
               shareholders upon request and without charge.

          (b)  The Registrant undertakes to comply with Section 16(c) of the
               1940 Act as though such provisions of the 1940 Act were
               applicable to the Registrant, except that the request referred to
               in the second full paragraph thereof may only be made by
               shareholders who hold in the aggregate at least 10% of the
               outstanding shares of the Registrant, regardless of the net asset
               value of shares held by such requesting shareholders.

<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereto duly authorized, in the
City of New York and State of New York on the 1st day of February, 1999.

J.P. MORGAN SERIES TRUST


By /s/ Michael S. Petrucelli
   ---------------------------------------
       Michael S. Petrucelli
       Vice President and Assistant Secretary

Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities
indicated on February 1, 1999.

George Rio*
- --------------------------
George Rio
President and Treasurer
Officer of the Portfolios

Matthew Healey*
- -----------------------------
Matthew Healey
Trustee, Chairman and Chief Executive Officer
(Principal Executive Officer)

Frederick S. Addy*
- ------------------------------
Frederick S. Addy
Trustee

William G. Burns*
- ------------------------------
William G. Burns
Trustee

Arthur C. Eschenlauer*
- ------------------------------
Arthur C. Eschenlauer
Trustee

Michael P. Mallardi*
- ------------------------------
Michael P. Mallardi
Trustee


*By /s/ Michael S. Petrucelli
    ----------------------------
        Michael S. Petrucelli
        as attorney-in-fact pursuant to a power of attorney.



© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission